ORAL ANSWERS TO QUESTIONS

NORTHERN IRELAND

The Secretary of State was asked-

Security Situation

Nicholas Winterton: What recent assessment he has made of the level of paramilitary activity by republican groups in Northern Ireland; and if he will make a statement.

Ann Winterton: What recent assessment he has made of the security situation in Northern Ireland.

Andrew MacKay: What recent assessment he has made of the activities of dissident republicans in Northern Ireland.

Shaun Woodward: The threat level in Northern Ireland remains at "severe". The Government are not complacent about the threat that dissident republicans continue to pose despite their having little or no community support. The House will wish to know that the Police Service of Northern Ireland continues to disrupt the activity of that small criminal group. So far this year, it has made 51 arrests, brought 12 charges and made three seizures.

Nicholas Winterton: The Northern Ireland Executive, fully supported by the majority of the people of Northern Ireland, not least the Unionist population, have achieved huge success, with major concessions to the nationalist population. Will the Secretary of State confirm to the House that there is now absolutely no need whatever for any paramilitary activity, unless it is by a hard core of people who want to destroy the peace, stability and economic success of Northern Ireland?

Shaun Woodward: The House will know of the historic vote that took place in Stormont on 9 March-nearly all parties in the cross-party community vote were in support. I simply say to the hon. Gentleman that there never has been a need for any paramilitary activity: not then, not now, not in future. As for concessions, we need to understand this as a matter not of concessions, but of power sharing. Both sides may have compromised, but they have done so for the good of everybody in Northern Ireland.

Ann Winterton: The new Chief Constable is supported-for the first time-by all parties in Northern Ireland, and yet the police's reputation for effectiveness in combating crime and terrorism has never actually been lower. Why is that?

Shaun Woodward: I am afraid that I agree with only one part of the hon. Lady's question, which is to recognise that the Chief Constable was appointed to his job with unanimous support; I entirely disagree with everything else she says. Confidence in policing in Northern Ireland is at record levels and will stay at record levels, and it continues to enjoy a support of which most hon. Members in this House would be extremely envious. The PSNI has brought down crime and been extremely successful in tackling even the activities of some of the most hated criminals in the community, and I hope she recognises that.

Andrew MacKay: Will the Secretary of State confirm that there is no hiding place for violent republican dissidents across the border, and that co-operation has never been better, particularly under the new Garda commissioner?

Shaun Woodward: I put on record that the levels of co-operation in both Northern Ireland and the Republic have never been greater or better. That is true of every aspect of dealing with and preventing crime, none more so than those areas of crimes associated with paramilitary activity, and especially the investigations that are taking place into the recent murders of soldiers and a police constable.

John Robertson: Does my right hon. Friend agree that it was unfortunate that the Ulster Unionist party could not come on board in what was happening in the devolution process, and that perhaps, the Conservatives might have done a bit more to try and persuade it to come on board?

Shaun Woodward: I think I will not take the temptation to make a political point, because I actually want to thank the Conservatives for their support. Their alliance with the UUP is of course a matter for them, as is the question of whether they can ultimately influence that party. I regret the fact that the UUP did not vote for the Hillsborough castle agreement and the devolution of policing and justice.

William McCrea: Dissident republicans pose a serious threat to the people of Northern Ireland. On Saturday last, a pipe bomb was found in a public place, outside the police station in Magherafelt, which is just a few yards from my home. Also, members and ex-members of the PSNI in my constituency and a number of others are under threat from dissident republicans. What active measures are the Government going to take to ensure that those organisations are infiltrated, brought to justice and defeated?

Shaun Woodward: The hon. Gentleman knows a great deal about the impact of that kind of activity, not only as a very fine and outstanding constituency Member of Parliament, but as a person and as a family member, so I say this with huge respect for, and understanding of, where the question is coming from. We will do everything to support the Chief Constable and the PSNI to tackle both those who have committed crime and those who intend to commit crime. We will work as closely as possible with the First Minister, the Deputy First Minister, the Executive and the institutions of devolved Government to bring those people to justice.

Adrian Bailey: Obviously it is very disappointing that the Ulster Unionists in the Assembly did not support the cross-community vote. Will my right hon. Friend continue to work on a cross-party basis in the hope that the Ulster Unionists will be persuaded to back this in future?

Shaun Woodward: Although the leadership of the Ulster Unionist party and its Assembly Members did not vote for this on 9 March, it was perfectly clear from public opinion and the confidence that all political parties had established in Northern Ireland that that vote had the support of all communities in Northern Ireland, including those who would identify themselves as supporters of the Ulster Unionist party. Unfortunately, its leadership did not reflect that on the day.

Alistair Carmichael: The Secretary of State's assessment of the level of risk is clearly sensible and realistic. It brings with it the potential for future challenges for the PSNI in dealing with that risk if it becomes reality. Will he confirm that he will use his good offices to ensure access to the Treasury for contingency funding should the necessity arise?

Shaun Woodward: I thank the hon. Gentleman for his support in this. He will know that my right hon. Friend the Prime Minister made an additional £30 million of funding available from the reserve for the current financial year for the PSNI. My right hon. Friend has already committed nearly £40 million of additional funding, which will be available to the Chief Constable to deal with the threat posed by dissidents. This Government will stand with the people of Northern Ireland and with the devolved Government.

Patrick Cormack: As the Secretary of State knows, the Select Committee on Northern Ireland Affairs strongly supports the devolution of policing and justice. Is he also aware that we attach the highest possible importance to the operational independence of the Chief Constable in tackling dissident republicans and in dealing with all his other duties?

Shaun Woodward: The operational independence of the Chief Constable is one of the principal outcomes and a huge success of the Patten reforms. It has enabled enormous confidence to be established across all communities in Northern Ireland. That, of course, has been the case and after devolution on 12 April it will remain so.

Laurence Robertson: A few days ago, an attempt was made to murder police officers in Newry after they were lured there by what is reported to have been a hoax bomb. Is the Secretary of State satisfied that there are sufficient intelligence sources to enable the police to counter what is becoming a very worrying and increasingly dangerous terrorist threat?

Shaun Woodward: Let us remember that those who wish to commit these crimes are people who, regrettably, refuse to accept the political settlement that has now been agreed. The Conservative party, along with other parties in this House, has helped to ensure that the early devolution of policing and justice has taken place. Let us remember that the report by the Independent Monitoring Commission said that that would be the "potent intervention" in dealing with dissident republicans.

Presbyterian Mutual Society

Philip Dunne: What recent discussions he has had with the Chancellor of the Exchequer on the effect on savers in Northern Ireland of the collapse of the Presbyterian mutual society.

Paul Goggins: The Chief Secretary to the Treasury and my right hon. Friend the Secretary of State are both members of the ministerial working group established by the Prime Minister. They, along with Ministers from the Northern Ireland Executive, are in regular contact in an effort to assist members of the PMS whose investments were affected by the society's entry into administration.

Philip Dunne: The Financial Services Authority warned of a problem with the PMS almost a year ago, the Prime Minister set up his working group last summer, the Treasury Committee issued a scathing report this February saying that nothing would be resolved unless a political lead was given and this morning the relevant Minister in another place gave no lead whatsoever and no clue as to what might happen. Is this not a classic example of a Government who are incapable of taking a decision and who are letting down 100,000 savers in Northern Ireland?

Paul Goggins: No, it is not, because the Prime Minister established the working group and I hope that it will very shortly be able to consider a proposition-a paper-from the Executive in Northern Ireland, which will put forward a range of options. The commercial option is, of course, one that we would all wish to see taken, if it is possible to do so. The Executive have also been working on specific ideas. We need to hear those ideas, consider them and look for solutions.

Alasdair McDonnell: Does the Minister agree that regardless of the legal and commercial niceties, there is a moral obligation on us all to help relieve the serious distress, both financial and emotional, that genuine savers in the PMS are suffering? These people invested in good faith and we have a moral responsibility to return that good faith or give them some return on it.

Paul Goggins: I agree that there is a sense of moral obligation here-the Prime Minister has said that-but none the less we have to find a solution that is hard-headed. We need a solution that will actually work in the interests of those who genuinely and in good faith invested their money in the PMS.

Jeffrey M Donaldson: The Minister will be aware of the hardships faced by many PMS savers, who become more concerned as time goes on. Will he and the Secretary of State use their good offices to ensure that the Treasury co-operates fully with the Northern Ireland Executive to bring forward a solution and a package that will bring real assistance to PMS savers as soon as possible, so that their plight can be resolved?

Paul Goggins: I agree strongly with the right hon. Gentleman, who knows, as I do, that many, particularly older, investors, have lost money and are suffering financial hardship as a result. We all have enormous sympathy with them, but what we need more than sympathy is a solution. Yes, we might need to consider a hardship fund in the end, but it would be better to find a sustainable solution that would work in the long term. A commercial solution would be best, but ideas will be coming from the Executive shortly that are worthy of consideration. We should work together to see whether a sustainable solution can be found.

Lady Hermon: The Minister of State and the Secretary of State have been excellent Ministers for Northern Ireland, and I appreciate their efforts on many fronts. Will the Minister of State give a clear assurance to PMS savers, not just in my constituency but across Northern Ireland, that the Government will find a solution, before the election, to the situation in which those people find themselves through no fault of their own? Will he give a clear assurance that there will be a solution before the general election?

Paul Goggins: I am very grateful to the hon. Lady for her comments about me and my right hon. Friend. I give her an absolute assurance that for every day of this Parliament that remains, we will continue to search for a solution that will work for those investors and that will restore confidence and, I hope, some money to them. In the end, it is their hard-earned money that has been lost, and we need a hard-headed solution that will work in practice.

Owen Paterson: Last June, the Prime Minister announced a review group to look at the plight of those involved in the PMS, and promised that it would report by September. The Prime Minister intervened to rescue the Dunfermline building society, and boasted to the Labour party conference that
	"not one British saver has lost a single penny",
	but it was his guarantee to banks that triggered the run on the PMS. What is the reason for yet another broken promise from this bankrupt Prime Minister?

Paul Goggins: The hon. Gentleman may be more interested in process than in solutions, but my right hon. Friend and I are interested in finding solutions. It is a completely false comparison, as anyone who has studied this knows, to compare the situation of the PMS with that of the Dunfermline building society. That financial institution was regulated by the FSA, whereas with the PMS we are talking about an industrial and provident society. I hope that, even at this stage, he will join us in the search for a solution rather than dwelling on process.

Owen Paterson: The Treasury Committee, with a Labour majority, said it was
	"unacceptable and farcical that both the UK Government and the Northern Ireland Executive...have failed to act."
	In Northern Ireland questions last June, the Secretary of State promised me further talks,
	"not with empty slogans and hollow promises but with real action-and not by doing nothing."-[ Official Report, 3 June 2009; Vol. 493, c. 261.]
	But here we are, nine months later, and nothing has happened. We cannot go on like this. Is it not time for change and for him to make way for a Secretary of State who will stick up for the people of Northern Ireland?  [ Interruption. ]

Mr. Speaker: Order. I want to hear the answer. There is far too much noise and there are far too many private conversations taking place in the Chamber.

Paul Goggins: I was trying, before, to give the hon. Gentleman a fairly basic lesson in the economics of this issue, but we will shortly be getting an economic master-class from others at this Dispatch Box. I encourage the hon. Gentleman to listen very carefully, because he might just learn something for a change. The position is absolutely clear: a considerable amount of work has been done, even in the recent past, by Members of the Executive in Northern Ireland. They are represented on the working group that has been convened by the Prime Minister, and my right hon. Friend the Chief Secretary also belongs to that group. We want to find solutions-

Owen Paterson: When?

Paul Goggins: In considering the paper coming from the Executive, that will be very shortly indeed.

National Security Protocols

Eddie McGrady: What recent discussions he has had with the Northern Ireland Executive on the national security protocols to be used after the devolution of policing and justice matters.

Shaun Woodward: I have discussed the national security protocol with a range of individuals and organisations in Northern Ireland. The current text addresses a number of concerns raised in those discussions.

Eddie McGrady: I thank the Secretary of State for his reply. The intelligence services withheld information from the investigation into the tragedy of the Omagh bombing, and allegations have recently been made about the intelligence services' role in the death of Kieran Doherty in Derry. What further discussions will he have with the Northern Ireland Executive to prevent such things from happening and to facilitate future investigations? He told the Northern Ireland Affairs Committee that it would become more likely that the intelligence services would co-operate, but more likely is not good enough.

Shaun Woodward: I am sure that the House will want to pay tribute to the hon. Gentleman, who has been an assiduous Member of Parliament for 23 years and was a founding member of his party. We wish him well in the future.
	I am of course considering the Select Committee's report, but I remind the House that Sir Peter Gibson published his report last year and that after he examined the information available on the day, he concluded that
	"to the extent that any relevant intelligence was derived from interception, it was shared with RUC...and Special Branch South promptly and fully".

Peter Robinson: I join the Secretary of State in paying tribute to the hon. Member for South Down (Mr. McGrady), who has always been an assiduous and hard-working Member of Parliament.
	Does the Secretary of State recall that, alongside discussions with the Executive about the national security protocols, there was consideration of finance and other related matters, including the transfer of four military sites? Will he use his influence to ensure that the promise given by the Prime Minister is not broken by the Ministry of Defence, which is trying to hold on to elements of those sites?

Shaun Woodward: The right hon. Gentleman knows that the bases are being transferred to the Executive as part of the generous devolution package that my right hon. Friend the Prime Minister and I agreed at Hillsborough castle. There are, of course, outstanding points of detail in relation to those bases, but I am confident that they will be solved to everyone's satisfaction.  [ Interruption. ]

Mr. Speaker: Order. I appeal to the House to settle down. We are discussing extremely important matters and I think that the people of Northern Ireland deserve a bit better.

Fuel Smuggling

Andrew Turner: What recent discussions he has had with the Chancellor of the Exchequer on steps to tackle fuel smuggling in Northern Ireland.

Paul Goggins: Tackling fuel crime is a key Government priority. Law enforcement agencies in the Organised Crime Task Force are working to disrupt fuel fraudsters, bring them to court and confiscate their criminal assets.

Andrew Turner: Will the Minister tell the House who is responsible for investigating smuggling, which involves a loss to the Exchequer of £200 million a year? Is it London or Belfast?

Paul Goggins: The Organised Crime Task Force in Northern Ireland is an excellent initiative that brings all law enforcement agencies together-Her Majesty's Revenue and Customs, the Serious Organised Crime Agency and the Police Service of Northern Ireland. It is increasingly important that they work with their counterparts from the Republic of Ireland-the Criminal Assets Bureau and the Revenue Commissioners-because it is by working together that we can best bring to justice the people who perpetrate these dreadful crimes.

Lindsay Hoyle: Does my right hon. Friend agree that the best way to stop the smuggling would be to reduce the price of fuel in the UK and not introduce the 3p levy?

Paul Goggins: My hon. Friend makes a late bid with regard to the business that will come later. On reducing opportunities for fuel smuggling, it is important that the price of fuel is now virtually the same in the Republic of Ireland and Northern Ireland. That reduces the incentive for fuel smuggling, but it encourages fraudsters to consider other kinds of fuel fraud, especially fuel laundering, which is why the Organised Crime Task Force must continue to pursue the issue with great vigour.

Decommissioning

David Simpson: When he expects to receive the final report of the Independent International Commission on Decommissioning.

Shaun Woodward: I placed in the Library of the House on 3 March the most recent report from the IICD, which recorded full and final acts of decommissioning. I expect a final report, including a report on armaments, to be published later in the year.

David Simpson: Can the Secretary of State confirm that within the final report, there will be a full inventory of the weapons that were decommissioned, as his predecessor assured us would happen?

Shaun Woodward: The hon. Gentleman will know that the IICD was set up by both the British Government and the Irish Government. The arrangements to bring to an end decommissioning in the Republic of Ireland have now been concluded. We are in discussions with the Irish Government and with the IICD about the scope of the IICD's final report, which will contain a report on armaments.

Mark Durkan: The Secretary of State rightly referred to the fact that both the British and Irish Governments set up the IICD. They did so arising out of agreements and negotiations in the talks leading to the Good Friday agreement. Does he recognise that when that commission was being set up and whenever decommissioning was being pursued, the main Unionist party insisted that decommissioning was not intended to happen as part of the agreement and was a fiction? Will he therefore acknowledge that the progress that has been made proves that those of us who committed to the agreement and to decommissioning were right and were honest?

Shaun Woodward: In the course of the peace process, political parties in Northern Ireland have taken positions which in the end will, I hope, reflect a unanimous position that all the work that has been done to achieve peace and stability in Northern Ireland has succeeded. I hope that all political parties-including, as I am sure it does, the Democratic Unionist party-support the work of the IICD.

Per Capita Expenditure

Peter Bone: What recent discussions he has had with the Chancellor of the Exchequer on trends in per capita expenditure in Northern Ireland on matters for which he is responsible.

Paul Goggins: My right hon. Friend the Secretary of State for Northern Ireland has had no recent discussions with the Chancellor of the Exchequer on these matters.

Peter Bone: The public expenditure per head of population in Northern Ireland is now more than £10,000, and more than a quarter higher than the UK average. As things have got better in Northern Ireland, one would have thought that trend would go down. Does the Minister agree, or does he expect to see it at a constant level?

Paul Goggins: The expenditure for which my right hon. Friend the Secretary of State is responsible relates now only to policing and criminal justice matters, and they will shortly be devolved. It is true that the number of police officers per head of population in Northern Ireland is higher than it would be in the hon. Gentleman's constituency or mine, but that is perfectly understandable when one considers the troubles of the past 30-odd years and the prevailing problem and challenge from dissident republicans.  [ Interruption. ]

Nigel Dodds: rose-

Mr. Speaker: Order. The House must come to order. I want to hear the question from Mr. Nigel Dodds.

Nigel Dodds: Is it not right that, after more than 35 years of the most terrible terrorist campaign, the level of expenditure on security in Northern Ireland was rightly spent to defend democracy and the Union with the rest of the United Kingdom? Will the Minister give a commitment that in the event that at any point in the future some kind of civil emergency arises, the money will be available to protect and defend the ordinary people of Northern Ireland against terrorism?

Paul Goggins: Both in the current financial year and for the next financial year a considerable amount of additional money will be made available to the Chief Constable to deal with the security threat. It is very much the judgment of the Chief Constable that we listen to. We will listen to his assessment and respond accordingly.

Saville Inquiry

Andrew Robathan: When he next expects the final report from the Saville inquiry to be published; and if he will make a statement.

Shaun Woodward: The House will be pleased to hear that finally, after more than a decade, Lord Saville will, this afternoon, I believe, make available to my officials his final report and inquiry, so that they may begin the checking process on article 2 obligations and national security that I am obliged to carry out as Secretary of State.

Andrew Robathan: What took place on Bloody Sunday was a tragedy, whoever was to blame. It took place nearly 40 years ago. We have spent £200 million of taxpayers' money and 12 years looking at the issues, probably just to stir up old enmities and reopen old sores. Does the Secretary of State think that it is all worth doing?

Shaun Woodward: The hon. Gentleman is right to record the fact that the report has cost £200 million. I disagree with him about the value of the Saville inquiry. Without the Saville inquiry, there would have been no stable peace process. Because of the inquiry, it has been possible to establish the bona fides for a peace process to succeed, and the whole House will be grateful for that success.

Gregory Campbell: Given that almost £200 million has been spent, with no definitive outcome yet in sight, does the Secretary of State agree that now is the time to call an end to further wasteful inquiries and deal with genuine innocent victims for the future rather than trying to remember the past?

Shaun Woodward: The hon. Gentleman need take no lessons, certainly from me, in being reminded that several thousand people lost their lives in the course of the troubles. We cannot forget the past; I am sure that he shares that view. The Saville inquiry will help us to produce the truth about the events of that day. We will learn from this inquiry. However, we do need a process to enable Northern Ireland to reconcile itself with its past.

PRIME MINISTER

The Prime Minister was asked-

Engagements

Michael Penning: If he will list his official engagements for Wednesday 24 March.

Gordon Brown: I am sure that the whole House will join me in remembering the life and achievements of Serjeant Steven Campbell from 3rd Battalion the Rifles, who died in Afghanistan earlier this week. We pay tribute to his energetic, brave and dedicated service. His infectious enthusiasm and his sincere patriotism will be sorely missed. The thoughts of everybody in this House, I know, are with his family, friends and colleagues.
	This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.

Michael Penning: I join the Prime Minister in paying tribute to our armed forces, especially those who have lost their lives this week. Our thoughts and prayers are not only with those who have lost their lives, and their families and loved ones, but those who have been injured.
	Last week the Prime Minister admitted that he had misled the Chilcot inquiry about the funding for the armed forces. When did he realise that he had misled-before or after he gave evidence?

Gordon Brown: As I said last week, when I was preparing for last week's Question Time I was shown the transcript of what I had said in the Chilcot inquiry, and I decided to make it absolutely clear, on the first occasion, to the House and then write to Sir John Chilcot. But I repeat: defence spending has risen by 12 per cent. in real terms. Every request for funding by the Ministry of Defence and the commanders has been met by the Treasury for the operations that have been conducted. I have to say that there was a 30 per cent. real-terms cut in defence expenditure under the last years of the Tories.

Kali Mountford: May I pay my own personal tribute to all the officers we have lost and give my condolences to their families? I am sure we miss them all.
	May I ask the Prime Minister why, in his view, fairness should be the hallmark of a good Government?

Gordon Brown: I appreciate the importance that my hon. Friend and her constituents attach to the fairness measures that we have introduced: the child tax credit, which has helped 6 million families in this country; the pension credit, which is helping 2 million pensioners to escape poverty in this country; educational maintenance allowances, which are helping half a million children to go to school; and a guarantee that young people under 24 will receive help and will not be unemployed but will have training and work. These are the measures that have been put forward by my right hon. Friend the Chancellor; they could never have been put forward by the shadow Chancellor.

David Cameron: I join the Prime Minister in paying tribute to Serjeant Steven Campbell, who died in Helmand on Monday. We are paying a high price in Afghanistan, and our troops and their families need to know that they have all our support. Our prayers and thoughts are with those who will not come home.
	This is likely to be the second last Prime Minister's questions before the general election, and clearly the Chancellor's statement is the main event of the day, so this provides an opportunity to clear up a number of different issues. May I start with a simple one? It is Budget day, and there is a picket line outside the Treasury, so will the Prime Minister confirm that on this occasion he would like people to cross it and go to work?

Gordon Brown: Let me first congratulate the right hon. Gentleman and his wife on the good news about their baby. Secondly, I thank him for getting near again to asking a question about the economy. Of course everybody is going to work here, and we will continue to work for a Labour Government and for jobs.

David Cameron: I am very grateful to the Prime Minister for his congratulations. I have had a lot of texts and messages from many hon. Members, most of them focusing on how to find the time for these things, but I am very grateful none the less.
	It was a very interesting answer from the Prime Minister. Last week he would not give any support to British Airways workers, but apparently the First Lord of the Treasury is content for his own work force to go to work.
	In this spirit of clearing up a few issues, one of the things the Treasury is working on concerns the Prime Minister's disastrous decision to sell gold at rock-bottom prices, losing- [Interruption.] It lost the country £6 billion. The Treasury has now lost its four-year battle against the Information Commissioner to keep the information about that decision secret, so will the Prime Minister now confirm that those documents will be published in full, with no redactions, before the general election?

Gordon Brown: I am very happy for any document to be published on that matter, but the right hon. Gentleman must do a bit better than that if he is talking about the future. We are lapsing into these issues, so let me just remind him that we have taken people out of unemployment and into work, that we have helped thousands of small businesses and that we have been helping people avoid the loss of their homes. The Conservatives have nothing to say about the present and the future. It is about time he started to think about the policies that work for the future.

David Cameron: If the Prime Minister is so relaxed about this information being published, can he tell us why he spent four years fighting it?

Gordon Brown: It is a matter for the Information Commissioner and the Treasury. [Hon. Members: "Oh!"] I am happy if the Information Commissioner wishes to publish documents, but is the right hon. Gentleman going to come forward with any serious policy about the future of this country? Has he got anything serious to offer this country for the future? Has he got anything to say to the unemployed of this country, or to mortgage holders or businesses? The person who will be talking about the future is the Chancellor. The shadow Chancellor has nothing to offer.

David Cameron: So really that is it-the Treasury always wanted this information published, and it was only the Information Commissioner stopping it. Once again, this Prime Minister takes the whole country for fools.
	Let us try another one. The Information Commissioner has also ordered the Department for Work and Pensions to release information on the Prime Minister's disastrous raid on every pension fund in the country. The Information Commissioner ruled in November that that should be published and the Department has appealed against it. Now that we hear the Government are not interested in these appeals, will the Prime Minister withdraw that appeal and make sure the information is published?

Gordon Brown: We had a debate -[Interruption.] The shadow Chancellor may laugh, but he was the subject of the debate in this House on these very issues and he could not sustain his case about the dividend tax credit. We made the right decision for British industry and the right decision to protect British pensioners. It is the Conservative party that has let pensioners down and would do so in future by opposing many of the measures that we have taken. I am happy for everything in my record to be judged. Now let us start with the Leader of the Opposition-will he tell us what happened over Lord Ashcroft?

David Cameron: It is a simple question. If the Prime Minister is happy for this information to be published, will he withdraw the appeal and have it published-yes or no?

Gordon Brown: We had this debate on pensions. [Hon. Members: "Answer."] Yes, we had this debate on pensions in this House of Commons. The shadow Chancellor tried to pursue the case against our policy to withdraw dividend tax credits. He could not even make a sensible argument about that at the time. We won this debate on dividend tax credits because our policy was the right policy, and it continues to be so.

David Cameron: On this, the second last Prime Minister's questions, we have just had what we have had all along from this Prime Minister: no answers, endless cover-ups, not giving the information, not answering the question and dithering on all the important decisions. How much longer are we going to have to wait until we get rid of this useless bunch of Ministers? The cab meter's ticking. Come on, tell us when the election is, then.

Gordon Brown: The right hon. Gentleman has been wrong on every single issue about the economy. When the people look at what the Conservative party proposed, they will see that it was wrong on Northern Rock, wrong on the restructuring of the banks, wrong on help for the unemployed, wrong on help for mortgage holders, wrong on help for small businesses and that, when it comes to right or wrong, it was wrong on Lord Ashcroft. Wrong, wrong, wrong-that is the Conservative party.  [ Interruption. ]

Mr. Speaker: Order. Government Back Benchers in particular must calm down. I am sure that they want to hear Fraser Kemp.

Fraser Kemp: Thank you, Mr. Speaker. Six days ago it was announced that the world's first mass-produced, affordable zero-emission car would be made in Wearside by Nissan, securing and creating thousands of highly skilled manufacturing jobs. Will the Prime Minister ensure that the investment that has been committed to provide the infrastructure for charging points and to support the British motorist who wants to switch to zero-emission cars will be maintained and improved in the coming years, so that the UK can take its rightful place as the world leader in zero carbon emissions?

Gordon Brown: I thank my hon. Friend for what he has done and what Nissan has done to create in the United Kingdom the first mass-marketed electric car. That will mean not only safeguarding and creating jobs, but 50,000 vehicles a year being produced in the United Kingdom.
	The one reason why it was possible for Nissan to make that investment was that Government support was available for the development of the new technologies that it is making. Unfortunately, the Conservatives' industry policy would withdraw support from low-carbon areas. We are the party of jobs and building industry for the future; they are the party of unemployment.

Nicholas Clegg: I would obviously like to add my own expressions of sympathy and condolence to the family and friends of Serjeant Steven Campbell from 3rd Battalion the Rifles, who tragically died this week after serving so selflessly and professionally in Afghanistan.
	Despite all the news about lobbying in Parliament, the issue has not yet been raised today. That might be because when we put forward proposals to restrict lobbying in Parliament, Labour and the Conservatives both blocked us; when we tried to give people the right to sack corrupt MPs, they both blocked us; and when we wanted to clean up party funding, they both blocked us. Is not the truth that this Parliament will go down as the most corrupt in living memory because they both blocked reform?

Gordon Brown: We have proposed and will implement a compulsory register of lobbyists. I have also made it clear that anybody who goes before the Advisory Committee on Business Appointments, as a former Minister, is compelled to take the advice of that committee. In future, Ministers will sign in advance a contract stating that that is exactly what they will do. We have taken action to make the system more transparent. We cannot say anything other than that the behaviour of the Members who were dealt with in that programme was unacceptable, and I believe that, because such behaviour diminishes us all, the action that we are taking is necessary for the transparency that the public want.

Nicholas Clegg: The Prime Minister has had 13 years to clean this up. Let us look at his record. Last summer, we put forward an amendment to introduce recall elections; Labour voted against it and the Conservatives did not turn up. Two days later, on our proposal to cap donations, they both voted against it. On our attempt in the Companies Bill to restrict lobbying, Labour voted against us and the Conservatives did not even turn up. Is this not just a grubby stitch-up between two old parties that basically want to keep things exactly the way they are?

Gordon Brown: I rather think that the right hon. Gentleman prepared his second question before he had heard the answer to the first.

Nicholas Clegg: No.

Gordon Brown: Oh, he did not. I made it absolutely clear to the right hon. Gentleman that any action that is necessary to secure transparency and proper accountability will be taken. That is why there will be a compulsory register of lobbyists; that is why every action that Ministers or former Ministers take in relation to business appointments will be transparent; and, if I may say so, I think that there is a need for humility on all sides of this House.

Nigel Griffiths: Will the Prime Minister confirm that, at 8 per cent., the unemployment rate in the United Kingdom is far below the rate in the United States, of 9.7 per cent., in France, of 10.1 per cent., and in Spain, of 18.8 per cent? Will he assure the House that he will never adopt the policies of the Conservative party, which thinks that unemployment is a price worth paying?

Gordon Brown: Unemployment is never a price worth paying. I have to say to the House that the claimant count for unemployment today is half what it was in the recession of the 1990s. I should also say that unemployment kept rising for five years after the recession ended in the 1980s. Unemployment is now falling as a result of the action that we have taken, and whatever happens to employment and unemployment in the next few months, we have saved half a million jobs that would otherwise have been lost.

Mark Pritchard: Given the need to restore faith in politics, could the Prime Minister assure the House that no Labour MP caught up in the lobbygate scandal will be given a peerage?

Gordon Brown: Talk about an own goal! I say to the Conservatives that the standards that will be applied to future membership of the House of Lords will be a lot higher than those applied to Lord Ashcroft.

Mr. Speaker: Helen Southworth.  [Interruption.] I am sure the House will want to hear Helen Southworth.

Helen Southworth: Thank you, Mr. Speaker. The taskforce on missing people has presented its recommendations. Will my right hon. Friend the Prime Minister ensure that they are acted on to protect children at risk?

Gordon Brown: No one has done more to stand up for the needs and requirements of missing children than my hon. Friend. She deserves the gratitude of the whole House for everything that she has done. I received, this week, the report of the taskforce on missing people. The Government fully accept all the report's recommendations, which set out a plan of action to improve how agencies will respond when young people go missing and provide the support that should be available to families. We are committed, and I thank her for how she has prosecuted this issue while she has been in the House. We are committed to taking the recommendations forward.

Graham Brady: Which would the Prime Minister rather be remembered for-doubling council tax or destroying people's pensions?

Gordon Brown: The next election.

Mr. Speaker: Patrick Hall.  [Interruption.] Order. I call Mr. Patrick Hall.

Patrick Hall: I would like to inform the Prime Minister that there are now nine Sure Start children's centres in Bedford and Kempston, delivering high-quality, much respected and popular support to a wide range of families. Does my right hon. Friend agree that to cut back on the universal service so carefully built up over the past decade would be a tragic betrayal of future generations?

Gordon Brown: We have achieved our target of 3,500 Sure Start children's centres, which are now reaching 2.7 million children under five and their families. I understand that the view of the Conservative party is that the Sure Start centres should be restored to their original purpose, which only covered a minority of children. The Sure Start children's centres are now vital parts of every single community, and nobody should tamper with the advances made in helping children under five.

Brooks Newmark: The Prime Minister has now had a week to think about it: will he now urge all British Airways staff to go back to work this weekend?

Gordon Brown: Yes, and I have done so, and I have done so consistently. The hon. Gentleman- [Interruption.] If the Conservatives want to turn an industrial dispute into a political provocation, they are going the right way about it. Any party that wishes to hold government in this country should want to see an industrial relations dispute stopped and arbitration and negotiations take place-it should want to bring this to a conclusion. After all, that is the view of its trade union envoy, who said that it was the business of the Conservatives to help people get back into work.

Sandra Osborne: A ban on mephedrone will come too late for my constituent, Jordan Kiltie, who died last week at the age of 19, but will the Prime Minister give us an assurance that, when the Advisory Council on the Misuse of Drugs reports on 29 March, he will act immediately to ban such legal highs?

Gordon Brown: I am very concerned about what my hon. Friend has told me, and I send my sincere condolences to Jordan's family and to their friends. We are committed to preventing young people from starting to take drugs. The advice is clear that, just because a substance is legal, that does not make it safe. We are concerned specifically about the harms of mephedrone, and the Advisory Council on the Misuse of Drugs is considering that and similar compounds as an absolute priority. We will receive its advice on 29 March, and subject to that advice we will take immediate action. We are determined to act to prevent this evil from hurting the young people of our country.

Gregory Campbell: Can the Prime Minister tell us when the more than 40,000 policyholders in Equitable Life-including many in Northern Ireland-who have waited many years for a satisfactory outcome are likely to be informed of a positive result? Thousands of such policyholders have passed away since the company began to decline business 10 years ago.

Gordon Brown: I understand the hon. Gentleman's question and the concern that his constituents and others have expressed. The Government expect Sir John Chadwick to submit his final report in May this year, and we have undertaken to provide a response within 14 days of its publication.

Stuart Bell: Can the Prime Minister confirm that, following Total SA's announcement that it is to develop the west of Shetland gasfields of Laggan and Tormore, involving development investment of £2.5 billion, it has placed an order with Corus Tubes to manufacture the gas pipelines at Hartlepool, involving an investment of £200 million? Is that not good news for Teesside and for the country?

Gordon Brown: That is indeed good news for the country; it is worth around 2,000 jobs in the country as a whole. It is because our recent tax changes have been able to support the development of remote deep-water fields that the project announced by Total can go forward. It has a development cost of £2.5 billion, and Total has awarded a contract worth £200 million to Corus Tubes to manufacture the gas pipelines in Hartlepool. That means jobs in Hartlepool, jobs in the north-east and jobs in Scotland. It means 2,000 jobs in the UK as a whole, and that is because a Government have been prepared to support with tax reliefs the development of North sea oil and gas.

Bob Spink: If the Prime Minister finds himself in Essex during April, as I suspect he might, will he kindly drop in on Castle Point to meet the wonderful people at Age Concern? They will thank him for deciding to re-index the basic state pension to earnings, but will he get on and do that quickly?

Gordon Brown: I am grateful for the hon. Gentleman's invitation to visit him and to visit Essex. I am aware that he is a long-standing campaigner on these issues, and I pay tribute to the work that has been carried out by Age Concern. It is right that, after the Turner report, we made recommendations about linking pensions to earnings. The hon. Gentleman will also recognise, however, that a lot of the work that helps pensioners is done by local councils, and I am afraid that some Conservative councils are letting down the elderly.

George Howarth: The eminent economist Professor David Blanchflower has predicted that if the various measures that are now in place to support people in jobs were to be withdrawn, unemployment could rise towards 5 million. What does my right hon. Friend think the effect would be if a policy of cuts were to be adopted as a matter of principle? How would that affect the recovery in our economy?

Gordon Brown: Every major country has made a choice about whether to continue the support for the economy that is necessary to ensure a recovery. Every major country in Europe, as well as America and all the major countries in Asia, has made the choice to support the economy so that we can avoid unemployment rising to the levels of the 1980s and 1990s recessions. Only one party seems to stand out against that by wanting to cut now, perhaps at the expense of causing a double-dip recession, and that is the Conservative party.

Mental Health Units

Julian Lewis: What the Government's policy is on the provision of modern in-patient mental health units.

Gordon Brown: High-quality in-patient care is one component of acute mental health services, supported by appropriate alternatives to admission. The Government paper "New Horizons", which the hon. Gentleman will know of, published in December 2009, set out a cross-Government programme of action to improve the mental well-being of people in England and to drive up the quality of mental health care.

Julian Lewis: Praise where it is due; under Blair's Britain, several first-class state-of-the-art mental health in-patient units were opened in or near my constituency. Under Brown's Britain, one of them has just closed and another is under threat. Instead of in-patient facilities, we are promised
	"a shared dashboard of clinical performance quality indicators".
	Is the Prime Minister happy to see front-line services replaced by management gobbledegook?

Gordon Brown: I know that the hon. Gentleman will want to be fair, and the World Health Organisation says that we are the best when it comes to the provision of mental health care. We obviously want to do better every time. Since 2001, there has been a 50 per cent. increase in real-terms investment in mental health. It is wrong to say that we are underfunding mental health. We are trying to do what we can and we will continue to do what we can. The hon. Gentleman should be fair in recognising that.

Lynne Jones: Main House in Birmingham has been providing a much valued residential therapeutic service for people with a personality disorder since being nationally commissioned more than 10 years ago. That service has just closed because when national commissioning ended, Ministers' intentions that commissioning should be picked up regionally were not undertaken by the strategic health authority. Will the Prime Minister look into what went wrong, with a view to reopening the service as soon as possible?

Gordon Brown: I would be very happy to look into that and I will ask the relevant Minister to get in contact with my hon. Friend.

Engagements

David Amess: My constituent, Mrs. Ditchburn, fled from Gran Canaria to the UK with her two children because she was involved in a violent and abusive relationship. Her partner has now invoked the Hague convention and her children have been snatched back under terrible circumstances. Will the Prime Minister now take a personal interest in the case and assist Mrs. Ditchburn to get her children back?

Gordon Brown: I am grateful to the hon. Gentleman for giving me advance notice of this question. I am sorry to hear of the difficult situation between his constituent and her husband about their children. The hon. Gentleman will know that following an application under the 1980 Hague child abduction convention on 17 March 2010, the High Court of England and Wales ordered the return of the children to their country of habitual residence. The children therefore returned to Gran Canaria on 20 March 2010. As the hon. Gentleman will understand, it is not for me to comment or intervene in the decisions of the court, but I will ask my right hon. Friend the Justice Secretary to look into this matter. He will write to the hon. Gentleman soon.

Jeff Ennis: The 82-year-old Mr. Harold Binney from Wombwell in my constituency is supporting my campaign to scrap the derisory 25p age addition on state pensions for the over-80s, which has remained at the same level since 1972, and to replace it with an additional £25 a year through the popular winter fuel allowance. Will the Prime Minister have a word with his very good friend, the Chancellor of the Exchequer, to make sure that this measure is included in his forthcoming Budget?

Gordon Brown: I do not want to anticipate all the news that my hon. Friend will receive in the Budget in a few minutes' time. We have made sure that over the last 10 years pensioner households-indeed, households over 60-have had winter fuel payments every year; they have reached a record level of payment. The Chancellor will comment on that in a few minutes' time.

Ian Paisley: This is the last time I will bother the House and the Prime Minister with a question-I am sure he is greatly relieved about that. I would like to associate myself and my colleagues with the words of condolence spoken in the House today. This is a sad and tragic hour in our nation, and rumours of war and wars are common. There is sorrow in hearts. Of course, people bury their dead; they put up their monument, but their heart is torn. I have been in too many houses like that in the north of Ireland not to know how deep the cuts are.
	In view of the situation that we have here, and its sadness and its sorrow, and the dark shadow that lies upon the whole of our world today, I ask the Prime Minister to continue to give himself, as always, to the task of deliverance and victory and peace-and may it come speedily.

Gordon Brown: I think the whole House will want to pay tribute to the right hon. Gentleman for a long and distinguished career, not just in this House but in a number of forums. That includes his position as First Minister of Northern Ireland. I believe that the part he played in bringing the Unionist community together-indeed, bringing the whole community together in Northern Ireland-to ensure that we had devolution of power, and to ensure that the process of devolution of power was completed, will adorn the history books in many decades and centuries to come. On this day and on this occasion, I want the whole House to thank him for his service to the House and to the whole community.

David Borrow: Does my right hon. Friend agree that no Member of this House or the other place should seek to prevent, through censorship, the BBC or the  Independent newspaper from questioning the involvement of Lord Ashcroft in alleged corruption scandals in the Turks and Caicos islands?  [Interruption.]

Gordon Brown: They do not like hearing the name "Lord Ashcroft", Mr. Speaker, but he is chairman of the Conservative party. Perhaps the Conservatives' zeal for investigations should extend to an investigation into Lord Ashcroft.

Ways and Means
	 — 
	Financial Statement

Mr. Deputy Speaker: Before I call the Chancellor of the Exchequer, it may be for the convenience of Members if I remind them that at the end of the Chancellor's speech, copies of the Budget resolutions will be available to them in the Vote Office.

Alistair Darling: This Budget takes place as the UK is emerging from the deepest global recession for over 60 years. It has been a testing time, which has required Governments across the world to make difficult decisions and difficult choices, and to take unprecedented actions. We had to decide whether to intervene to rescue the financial system or to stand on the sidelines, and whether we should support the economy, business and families, or let the recession take its course. The record shows that the right calls were made.
	Global recession has not turned into depression. Unemployment here in the UK has not risen as much as was feared. Borrowing, as I will explain later, is lower than forecast last year. But the recovery is still in its infancy, and there are equally tough choices ahead: choices that will shape our economy and society for decades to come. The task now is to bring down borrowing in a way that does not damage the recovery, or front-line services on which people depend. The challenge now is how we invest as a country to support the industries of the future and allow the talent of the British people to flourish.
	At the heart of our decisions is a belief that Government should not stand aside, but should help people and business to achieve their ambitions. My Budget today builds on that belief, and on our confidence in this country. This will be a Budget to secure the recovery, to tackle borrowing, and to invest in our industrial future. It will continue targeted support for businesses and families where and when it is needed. It will set out how we will stick to our plan to halve the deficit within four years.
	Our economy is at a crossroads. Having come through this global recession, this Budget will set out a route for the country to long-term prosperity. At its heart is a £2.5 billion one-off growth package to help small businesses, promote innovation, and invest in national infrastructure and key skills. This package will be paid for by switching spending from within existing allocations and the extra proceeds from the tax on bank bonuses, in line with a Budget that is balanced over the period.
	The world is still recovering from the severest economic shock of our lifetime. Despite what some try to suggest, the recession has not been restricted to the UK, nor did it begin here. A storm which began in America spread rapidly around the world. It was the biggest test that countries had faced in modern times. When I presented my Budget a year ago, world leaders had just met in London to agree unprecedented action to rescue the global economy. Governments of all political colours acted to stabilise their banking systems and to use fiscal and monetary policy to boost demand and protect jobs.
	Not everyone here supported the action taken, but with hindsight it is even clearer that the right calls were made: economic disaster was averted; growth has begun to return across the major world economies; and the prospects for the global economy are much more positive than they were a year ago. But there is nothing preordained about continued recovery. There are still uncertainties. Financial markets are febrile, oil prices have increased by over 50 per cent., bank credit, while improved, remains weak in many parts of the world, and confidence has not fully returned to either businesses or consumers.
	That is particularly the case in Europe, which is the market for 60 per cent. of our exports. Germany saw no growth in the last quarter. Ireland, another key trading partner, has contracted by over 10 per cent. Spain is still in recession. Italy has slid back into negative growth. Unemployment at 10 per cent. across the euro area is adding to uncertainty. All these factors are having an impact, particularly on an open trading economy like the UK. So it is imperative that EU countries act with renewed energy and vigour to get the European economy moving forward again. We need to support trade, discourage protectionism and take forward structural reforms. Such continued international action is crucial not only to global prospects but to each and every country's future. Over the last two years we have been reminded of the force for good that Governments can be in protecting people. The role of government is now equally critical in regulating the global financial system and putting in the right foundations for future growth, jobs and prosperity.
	The crisis in the world economy started in the banking sector, so improved global financial regulation must be the key priority. Our first test here in the UK came with the problems of Northern Rock. The Government intervened to protect savers and underpin the financial system. The unprecedented decision to nationalise a high-street bank was controversial, as was our action later that year to recapitalise the banking system. Other Governments right across the globe also acted to stabilise the financial system, and I believe this judgment has been proved correct. In the UK, the latest figures from Northern Rock show it is returning steadily to normality. RBS is now being restructured and is rebuilding. Last week Lloyds predicted a return to profitability this year. We will sell our shares in RBS and Lloyds, as well as Northern Rock, in a way that maximises value for the taxpayer and recoups the money we have invested.
	We intend to get all taxpayers' money back. In the meantime, I can tell the House that the Treasury has already received over £8 billion in fees and charges from the banks, in return for our support. At the time of the pre-Budget report I put in place a one-off 50 per cent. tax on the excessive bonuses of bankers. I made it clear that banks had a choice of whether to pay bonuses or not-but that if they did, given the amount of taxpayer support that had been provided, I believed it was right that the country as a whole should benefit. I can tell the House that that tax has raised £2 billion-more than twice as much as was forecast. That is money paid by the banks, and those receiving bonuses will, of course, also have to pay income tax at the highest rate.
	As well as supporting the banking system during the crisis, we need long-term reform to prevent excessive risk-taking. Under our presidency of the G20 last year, we put in place a plan to reform the international regulatory system, but we still need to do more to strengthen global banking. The G20 countries must put in place new rules on capital and liquidity by the end of the year. We also need to reform remuneration practices, improve cross-border resolution for when banks fail, and ensure that international standards are implemented. We cannot continue with a situation where the banks are rewarded for creating excessive risk, but the taxpayer foots the bill when things go badly.
	More countries now agree on the need for an international systemic tax on banks, which must be brought forward quickly, as I will urge international Finance Ministers in Washington when they meet next month. I agree with all those who think that such a tax should be internationally co-ordinated. Going it alone, as some have suggested, would costs thousands of jobs, not just in London but across the whole country. Global efforts must be complemented in each country with a drive to implement existing banking reforms, as we are doing in the UK.
	As part of the reform of banking, I want to make it easier for everyone to access banking services. Since 2003, the number of people without a bank account has been halved. I can today announce that we will do more to combat financial exclusion, through a guarantee that everyone can have a basic bank account. That will mean that over the next five years up to 1 million more people will have access to bank accounts-something essential in the modern world.
	We must be careful that, as banks begin to return to profit, the sense of urgency around reform is not diminished. There can be no return to business as usual for the banks, but we also must remember that their success is vital not just for the global economy but for Britain's future. London is the world's leading financial centre. Across the country, the sector supports over 1 million jobs, including in Edinburgh, Leeds, Manchester, Cardiff and other cities. A healthy, strong financial services industry is essential for our long-term prosperity.
	The crisis might have started in the financial sector, but it spread rapidly to the entire global economy, underlining why intervention was essential. The impact has meant that the UK economy has contracted by around 6 per cent. over the course of the recession. That compares with 8 per cent. in Japan, 7 per cent. in Germany and 4 per cent. in the United States. Businesses in the UK have taken painful decisions. Many families have seen their incomes squeezed. Given the intensity of the global storm, no Government could prevent all jobs from being lost, or all businesses from closing.
	However, I believe that Governments have the ability to act and the responsibility to reduce the length and severity of the recession, which is why we took decisive action to stimulate the economy, cutting taxes for families and business, as well as bringing forward capital spending. We also introduced initiatives such as the car scrappage scheme to protect jobs and skills. I can tell the House that this helped to drive an increase in sales of nearly 30 per cent. in the past year, and this in the middle of a recession.
	Of course those decisions have a cost, but the cost would have been far greater, for families and the economy, if we had failed to act. We could have followed previous Governments and watched from the sidelines; we could have listened to those who opposed all those measures last year. But if we had, I believe that we would still be in recession. I am also certain that the pain caused would have been worse and more widely felt.
	Indeed, in the recession of the 1990s the rate of home repossessions was twice as high as now. That would have been the cost of abandoning families to their fate. Double the rate of business failures: that would have been the cost of failing to support business through this recession. And because of the policy decisions that we made, the Bank of England has been able to take decisive monetary policy action during the downturn. Interest rates have been held at record lows-below 1 per cent.-although they were at double figures for almost three years in the early 1990s. But more than anywhere else, we can see the impact of our choices in the state of the jobs market here. Unemployment has been rising in this country, as it has been around the world. Last week's figures, however, showed that UK unemployment had fallen, and is lower than unemployment in the euro area and unemployment in the United States. Even after the severity of this recession, the claimant count stands today at 1.6 million people. This compares with 3 million people in the recessions of the early 1980s and 1990s. Nor, because of a decade of welfare reform, has there been the massive increase in the numbers on inactivity benefits that we saw in the 1980s and 1990s.
	I can tell the House that the claimant count today is still lower than the number we inherited in 1997. That has not happened by chance; it has happened because of the choices that we made. It is because of the tremendous efforts by business and work forces to keep people in jobs. It is also because, as the global storm hit our country, we responded with an additional £5 billion to help people find new work more quickly. We expanded the Jobcentre Plus network and offered support through the rapid response service at firms hit by redundancies.
	It is clear that our approach is making a difference. Nearly 4 million people have been helped off the claimant count in the last year alone. With personalised support, around three quarters of those losing a job are leaving the claimant count within six months. Indeed, if this recession had followed the course of the last one, four times as many jobs would have disappeared.
	The flexibility of the tax credits system has also provided automatic support, compensating families for loss of income due to shorter working hours and part-time working. I can tell the House that this year 440,000 families have benefited from this extra help-on average by £38 more per week-when they need it most. Despite all this support, there are groups that are likely to need more help, even as the economy recovers. For older workers, I want to extend the support provided by tax credits. To make it easier for those over 60 to receive working tax credit, we will reduce the minimum number of hours they need to work to be eligible. To enable people who want to work longer to do so, we are now consulting on reform of employers' right to make people retire at 65. We are looking at options that include scrapping the default retirement age, raising it or giving employees stronger rights.
	For younger workers, I have introduced a guarantee of a job or training for every 18 to 24-year-old after six months out of work, which is already proving a success. This was to run until March next year, but with recovery still in its infancy, we should not withdraw this support too soon. Because unemployment has been lower than forecast, the cost has been lower than expected. I have therefore decided to use the money saved to extend the guaranteed offer to young people until March 2012. So for the next two years I can guarantee that no one under 24 will need to be unemployed for longer than six months before being offered work or training: help with jobs now and, as I will outline later, help with jobs for the future.
	Low mortgage rates have reduced costs for home owners, but many families still face fears over repossession. The support for mortgage interest scheme, which I enhanced during the recession, is already helping 220,000 homeowners who lost their jobs. To maintain this help during the recovery, I will continue to pay this support at the higher rate for another six months.
	I am also determined to do more to help families take that first crucial step on the housing ladder. We have introduced new help through shared equity schemes, and in 2008 we also brought in a stamp duty holiday on all transactions under £175,000, which ended in December. By helping 260,000 home buyers, it supported the entire housing market when it needed it most. The housing market is now stabilised and has begun a slow recovery, but many first-time buyers, particularly those without large deposits, still find it hard to get a mortgage. I want to help them, but to do so in a way that is properly funded.
	I can announce that I will double the stamp duty limit for first-time buyers from midnight tonight from £125,000 to £250,000 for this year and next. This means that nine in 10 first-time buyers will pay no stamp duty at all. But to ensure this measure does not become a burden on public finances, this relief will be funded through an increase in the stamp duty to 5 per cent. for residential property over £1 million from April next year.
	Tax-free individual savings accounts have been an extraordinarily popular way to save, including for those saving for a deposit on their first home. Since their introduction in 1999, 19 million people have taken them out, saving over £270 billion. From next month, the annual ISA limit will rise from £7,200 to £10,200, of which half can be saved in cash. To help encourage saving further, I have decided that ISA limits will increase annually in line with inflation. These changes come at a time when the savings ratio has already risen strongly over the past year, to the highest it has been since 1998.
	The last year has been tough for many people, but the evidence shows it would have been harder still without the choices we made and the action we took to support the economy. We need the same good judgement and decisive action to secure and strengthen the recovery, and to provide the right basis for the country to seize the opportunities ahead.
	I want now to return to my forecasts. As I have said on many occasions, the world economy is still in a period of great uncertainty. In the absence of Government action to support the economy, the weakness in some of our overseas markets, particularly Europe, could result in a substantial downward revision of our growth prospects, but because of the action we have taken through the recession, and the measures that I am announcing today, I believe that only a small reduction is needed.
	This year, as I said in last year's Budget speech and last year's pre-Budget report, I expect the economy to grow by between 1 and 1.5 per cent. I have decided to revise slightly downwards my forecast for 2011 to bring it into line with those of the Bank of England, to growth of between 3 and 3.5 per cent. Projections for the public finances are based, as is normal, on the lower end of these forecast ranges. As the economy continues to rebalance following the recession, my forecast for the following years is unchanged.
	We have already seen inflation rise above 3 per cent. in the first month of this year, increasing the cost of living. The inflation figures released yesterday show a rise of 3 per cent. Although high compared to recent years, this is a far lower sum than the peaks in inflation of over 10 per cent. in the 1990s and 20 per cent. in the 1980s, and as the Governor of the Bank of England has said, the present increase in inflation should be temporary, and results from the ending of the VAT cut and other one-off factors.
	I want, however, to help families and business through this period, so I have decided to stage next month's increase in fuel duties. Instead of the planned increase, fuel duty will rise by a penny in April, which is less than inflation, and it will be followed by a further one penny rise in October, and the remainder in January. The staging will ease the pressure on businesses and family incomes at a time when other prices are increasing. By the time the full rise comes in at the beginning of next year, I am forecasting that inflation will be back at 2 per cent. I am today writing to the Governor of the Bank of England in the usual way to confirm that the inflation target remains unchanged at 2 per cent. With interest rates also expected to remain low and stable, this is essential for future growth.
	The cost of stabilising the financial system and stimulating economies has meant an inevitable increase in Government borrowing here and around the world. This has been exacerbated by the sharp fall in tax revenues during the recession. The importance of our financial industry, which provided £1 in every £4 of corporation tax, has meant that we have been particularly badly hit. In the pre-Budget report I forecast that public sector net borrowing would reach £178 billion this year.
	We now have hard data rather than forecasts on tax revenues for 11 months of this financial year, and as a direct result of the action we took in supporting the economy at a difficult time, tax receipts in December, January and February have been better than expected. More resilient consumers and retailers have meant that VAT receipts are now £3 billion higher, better company profits have led to higher corporation tax receipts, and with more people having stayed in work, income tax revenues are stronger.
	These are the results of the deliberate choices we made over the last two years. At the same time, spending-including spending on benefits and tax credits-has been broadly in line with my forecast. As a result, I can tell the House that borrowing this year should now be £11 billion lower, at £167 billion. In 2010-11, in part because of one-off factors boosting receipts-such as this year's tax on bank bonuses-borrowing will be £163 billion.
	It would not be sensible to assume that this year's surplus in receipts will be maintained in full in the medium term, but with the economy recovering in later years, together with the revenue from tax increases already announced, borrowing will fall to £131 billion in 2011-12, then to £110 billion; in 2013-14 it will be £89 billion; and it will reach £74 billion in 2014-15-£8 billion lower than was forecast in December. This will mean that debt is £100 billion lower by 2013-14 than was expected at the time of last year's Budget.
	As a share of the economy, borrowing is forecast at 11.8 per cent. of gross domestic product this year. It will fall to 11.1 per cent. next year, then 8.5 per cent. In 2012-13 it will be 6.8 per cent., then 5.2 per cent., and fall to 4 per cent. in 2014-15. This means a reduction in the deficit from 11.8 per cent. to 5.2 per cent. It will have more than halved over a four-year period.
	The structural deficit, which takes into account the economic cycle, is estimated to be 8.4 per cent. of GDP this year and to fall to 2.5 per cent. by the end of the period. That is a reduction in the structural deficit of over two thirds, removing the bulk of the structural deficit by the end of the next Parliament. And as I have said before, should the economy perform better than expected, we will be able to do more to reduce the deficit.
	In 2007 Government debt as a share of the economy was lower in the UK than in every other G7 country except Canada. Debt has increased across the world as a result of this global recession. According to the International Monetary Fund, net debt as a share of GDP is expected to reach 82 per cent. in Germany, 83 per cent. in France and 85 per cent. in America. As a result of our action to support the economy, I can forecast that public sector net debt here will reach 54 per cent. of GDP this year. It will then increase to 75 per cent. by the end of the forecast period in 2014-15, but net debt as a share of GDP will begin to fall the year after that. Even at its peak, debt will be in line with the average of the G7 economies. This is the fastest deficit reduction plan of any G7 country and we will meet our statutory obligations. To start cutting now risks derailing the recovery, which is already bringing down borrowing more rapidly than expected. To go faster, in the face of uncertainty, would mean taking a huge risk with people's jobs and incomes, and with our country's future. I am not prepared to take that risk. We have worked too hard as a country to come through this recession to throw it away now.
	I know there are some demanding immediate cuts to public spending. I believe that such a policy would be both wrong and dangerous.
	We will need to work as hard to establish a platform for sustained growth, jobs and prosperity in the long term. Since the start of the global crisis, I have always been clear that support for the economy now must go hand in hand with a clear plan to reduce borrowing. Our plan is to reduce borrowing by £78 billion in cash terms over the next four years. We are set to achieve that goal by a combination of three elements: tax; public spending cuts; and, of course, growth in the economy.
	First, on taxes, I have already made difficult decisions, and I have been guided by our values of fairness and the need not to undermine the recovery. The one penny increase in the main rate of national insurance contributions will not affect anyone earning under £20,000 a year; nor will it come into effect until April next year, by which time I expect that the recovery will be stronger and more secure. The 50 per cent. rate of income tax will come in next month, but it affects only those with earnings over £150,000 a year-the top 1 per cent. of earners. For people with incomes over £100,000 a year-the top 2 per cent.-we will gradually remove the value of their personal allowances. Tax relief on pensions will be restricted from next year, but again only for those with incomes above £130,000 a year.
	Among all the tax rises since the beginning of this global crisis, 60 per cent. of them will be paid for by the top 5 per cent. of earners. We have not raised these taxes out of dogma or ideology; we are determined to ensure that our overall tax regime remains competitive. But I believe that those who have benefited the most from the strong growth in incomes in the past years should now pay their fair share of tax. I have no further announcements on VAT, on income tax or on national insurance rates.
	I can confirm that duty on beer, wine and spirits will increase as planned from midnight on Sunday. Alcohol duties will also be increased by 2 per cent. above inflation for two further years from 2013, and the planned increase in fuel duty and landfill tax will continue for one year from 2014.
	A long-standing anomaly has meant that cider has been under-taxed in comparison with other alcoholic drinks. I intend to correct that, so duty on cider will be increased by 10 per cent. above inflation from midnight on Sunday, and in September changes will be made to the definition of "cider" to ensure that specific strong ciders are taxed more appropriately.
	Tobacco duty will increase from today by 1 per cent. above inflation and then increase by 2 per cent. in real terms each year until 2014. I have also decided to freeze the inheritance tax threshold for a further four years, and this will help to meet the cost of care for older people. My right hon. Friend the Secretary of State for Health will shortly set out further proposals. Altogether, our tax plans will raise £19 billion towards reducing borrowing.
	The next element of our fiscal plan is to control public spending. But to cut spending now, before the recovery is self-sustaining, would be short-sighted and counter-productive. That is not just my view, but that of Governments around the world, the International Monetary Fund, the World Bank and the OECD. I know that others take an opposite view. Indeed, the House will remember that in his Budget response last year the Leader of the Opposition even then demanded immediate action to cut spending. If we had listened to him, the result would have been to deepen the recession and delay the recovery, and to see more businesses closing and many more jobs lost. As a result, borrowing would have been higher, not lower. We did not follow that course; nor did any other G20 country. Cutting support now would take demand out of the economy, pull the rug from under the recovery and delay our return to sustained growth.
	So we will stick to our spending plans for next year, which will see a 2.2 per cent. real-terms increase. That will allow more time for the private sector to invest and create jobs, ensuring that the recovery will continue and strengthen. It will also mean that we can maintain the improvements that we have put in place for our front-line services over the past 13 years-improvements that have seen 118 new hospitals, 1,600 new schools, and tens of thousands of extra doctors, nurses, police and teachers.
	In December, I set out how we will protect spending on those front-line public services, on which we depend. That enabled us to guarantee NHS health checks every five years for the over-40s; referral to a cancer specialist within two weeks; extra maths and English tuition for all seven to 11-year-olds who fall behind; a place in education or training for every 16 and 17-year-old; and to maintain funding for police officer numbers. I can confirm that we will honour those guarantees.
	I can also confirm that we will allocate over £4 billion from next year's reserve to fund operations in Afghanistan. I know that the whole House will want to join me again in paying tribute to the courage, commitment and professionalism of our armed forces, who represent all that is best in our country.
	We can offer these guarantees for front-line services-and deliver our plan to reduce the deficit-only through continued reform and efficiencies, and through holding down increases in spending overall. If unemployment is lower than predicted, as has already been the case, the cost of paying benefits will be lower. Debt interest costs have also been lower than expected. Even so, it is clear that the next spending settlement from 2011 onwards will be very tough-it will be the toughest for decades. Even before the spending review has been held, we have already identified cuts and efficiencies of over £20 billion, through limiting pay, reducing programmes and making savings. In December, I set out savings of £4.4 billion in public sector pay and pensions by 2012-13. There will be reductions in the pay bill for senior civil servants. Overall, we intend that public pay settlements will be held at a maximum of 1 per cent. for the two years from 2011. We will also implement reforms to ensure that public pensions are affordable.
	Secondly, we need to identify savings across every part of the public sector by delivering services more efficiently; they will be tough and challenging, but they are achievable. We have already saved £26.5 billion from departmental budgets between 2005 and 2008, but we need to go further. At the pre-Budget report we committed Government Departments to find over £11 billion of new savings through reforms, without damaging the front-line services. Departments will publish today details of how they will make these savings from 2011, as we work towards the spending review. We will also find savings by relocating civil servants from expensive London offices to elsewhere in the country. In the long term, I am announcing that the number of civil servants in London will be reduced by a third. As a first step, 15,000 posts will be relocated within the next five years. I can tell the House today that 1,000 posts from the Ministry of Justice will be moved out of central London, saving £41 million.
	Thirdly, on top of those savings, we have already identified £5 billion of cuts in specific programmes, which were announced in December. I can confirm that they will go ahead as planned. Fourthly, it has always been our goal to reform the benefits system so that it makes work pay. The current approach to calculating housing benefit pays very high rates to a small number of tenants in expensive areas. That discourages employment and is unfair. I can tell the House that we are taking steps to address that, so from October next year the most expensive properties across the country will be excluded from the housing benefit calculation in each area. In addition to measures to prevent fraud and error, that will save nearly £250 million a year by the end of the forecast period.
	That is over £11 billion from greater efficiencies, £5 billion from scaling back or cutting lower priorities, and over £4 billion from reducing the cost of public sector pay and pensions. In total, that is £20 billion-worth of savings to reduce borrowing and protect front-line services-even before the spending review.
	There is one other area that can help to reduce Government debt. I announced at last year's Budget a programme to secure £16 billion through asset sales, and we are making considerable progress. On the student loan book, we are looking to appoint advisers in the next couple of months to develop a sales proposal. On the Tote, we are on track to launch the sale process this summer. We are also finalising options on the sale of the Dartford crossing. The proceeds from these sales will make a significant contribution to reducing debt.
	The third element of our plan to reduce borrowing is economic growth. As we have already seen in the enhanced tax receipts since December, a stronger economy can make a major contribution to reducing borrowing. The raw materials to fuel growth are here in abundance. No country has more talent, and we remain the world's sixth biggest manufacturing nation. We have world-class industries, advanced manufacturing, bioscience, aerospace and the creative sector, whose products are in demand across the globe. We have worked hard to create the environment where that ingenuity and entrepreneurial flair can thrive, doubling investment in our science base, and having low interest rates and inflation and the lowest rate of corporation tax in the G7.
	However, our competitors are not standing still. The opportunities and jobs of the future will come from the new markets and new locations, particularly in the east. We cannot take growth for granted. Again we have a choice: we can sit back and hope for the best or we can recognise the role that Government can play in providing a launch pad for businesses to succeed. Of course, it is the private sector, with its drive and ingenuity, that will create jobs and prosperity, but just as the Government have been critical in reducing the severity of the recession, it is the Government who have a crucial role in building our country's strengths. Together with the Secretary of State for Business Innovation and Skills, I have been working to find effective ways to enable small businesses to grow, to invest in key national infrastructure and skills, and to promote research, innovation and enterprise.
	Access to finance is vital for small businesses. It was understandable that banks reduced lending to repair their balance sheets, but it caused problems for companies and the wider economy. In return for support during the financial crisis, we have made banks accept their obligations to lend more. In the past 12 months, RBS and Lloyds, which make up half the market, have lent £38 billion to small and medium-sized businesses. However, as recovery gets under way, we need to ensure that viable small and medium-sized enterprises continue to get the credit that they need. So, over the next year, I have agreed that RBS and Lloyds will provide a total of £94 billion of new business loans, with nearly half going to SMEs.
	There are still companies that are unfairly denied credit and that feel powerless to challenge such decisions. I want to change that position and to give them the right to have their credit complaints properly examined. To help them and the economy, I will set up a new service to fast-track credit complaints from SMEs. This new credit adjudication service will examine lending decisions to see whether they are fair. It will have legal powers to enforce its judgments if it believes that credit has been wrongly denied. But, ultimately, the best way to open up credit for business is to boost competition. We have already made sure that the restructuring of Lloyds and RBS, which will see 900 branches change hands, will bring new entrants into the market. At least five new banks have already either established themselves as business lenders or are in the final stages of setting up. We want even more competition, so the Financial Services Authority will improve and speed up the licensing processes for new banks.
	We want successful businesses to be able to attract equity and venture capital, as well as bank loans. The Government already offer a wide range of support for businesses to help to unlock additional private investment, but businesses find that the wide variety of options can be daunting, so we are bringing together all those initiatives under a new national investment corporation to be called UK Finance for Growth, which will streamline and improve our offer to the SME sector. The new body will oversee the Government's £4 billion range of finance support for businesses. That will also include a new growth capital fund, which will have a specific role in providing fast-growing companies with the private capital that they need. Commercial banks have so far agreed to contribute more than half of the £200 million committed to that fund. It will eventually provide £500 million of finance.
	In addition, in this Budget, I am taking forward a range of proposals to help larger firms to access non-bank sources of lending. Small businesses throughout the country count central Government as one of their key clients. Building on the recommendations of the Glover review, I will increase by 15 per cent. the proportion of central Government contracts that go to small and medium-sized firms. That could mean new business worth an extra £3 billion from central Government alone and up to £15 billion across the wider public sector. In addition, we are taking steps to speed up payments to businesses from Government Departments, so that 80 per cent. of invoices will be paid within five days.
	I will also provide extra support to small businesses through the tax system. The improved time to pay scheme has helped businesses to spread £5 billion-worth of tax payments over a timetable that they can afford. Between them, those businesses employ more than 1.4 million people. The extra time has also helped businesses to pay more of the tax that they owed. That double benefit has convinced me that the scheme should be extended for the whole of the next Parliament.
	On top of giving small businesses more time to pay taxes, I want to reduce their taxes, and to help them invest and expand. First, business rates are a fixed cost from the moment a company moves into its premises. The Federation of Small Businesses says that that is the third biggest cost after salaries and rents. To help fledging businesses set up, as well as existing ones, I have decided to cut business rates for one year from October. That means a tax reduction for more than half a million small businesses in England, 345,000 of which will pay no business rates at all. That includes 90,000 industrial premises, 60,000 offices and almost 100,000 shops.
	Secondly, I am determined to make sure that the tax system does not hold back decisions to invest during the economic recovery. Scrapping investment allowances, as some have proposed, in order to pay for an overall rate of corporation tax, makes no sense at all. It would mean, for example, that manufacturers and many smaller companies would see their tax bills increase, whereas banks would get a windfall profit. So, instead, I want to help small businesses to expand by doubling the annual investment allowance to £100,000. As a result, 99 per cent. of businesses will be able to deduct from their taxable profits in the first year all investments in plant and machinery.
	Thirdly, I am going to make it more attractive for wealth creators and innovators to set up their own businesses. To do that, I am doubling entrepreneurs' relief for capital gains tax. At the moment, the first £1 million of lifetime gains are taxed at a lower rate of 10 per cent., rather than at the main rate of 18 per cent. That threshold will now increase to £2 million, enabling entrepreneurs to benefit more from their effort and investment. I can also confirm today that I am not increasing the main rate of capital gains tax.
	Better access to finance, improved procurement, lower taxes and more time to pay-this is benefiting hundreds of thousands of small businesses and providing the backbone of future economic growth and jobs.
	Investment in both traditional and new infrastructure is also vital if our economy is to grow and our businesses are to succeed. We have to move goods and people around the country and around the globe. It is no good supporting high-speed rail links in principle but declining to back plans that might lead to local controversy. The Government are taking forward plans for a high-speed rail link from London to the midlands and then to the north and Scotland. In government, we have taken the tough decisions to improve our transport links and to cut delays in our planning system. Plans for Crossrail and Heathrow, along with high-speed trains, will improve transport in this country and will support some 100,000 jobs over the coming years.
	Roads, of course, are an essential part of our transport network. The bad weather of the past few months has taken a damaging toll on their condition, so I am providing £100 million to pay for repairs to local roads throughout the country and £285 million to pay for improvements in the motorway network, including by expanding capacity by allowing hard-shoulder running. For that and other measures there will be consequential provisions, where appropriate, for Scotland, Wales and Northern Ireland.
	Improving our infrastructure also requires us to renew and modernise our energy supplies. Again, our competitors are not standing still. China is building a new power station every week to meet its growing energy needs. We need to take long-term decisions to secure our supplies, while moving to a low-carbon economy. That means replacing our ageing nuclear power stations and investing in renewable energy along with sustainable transport.
	In last year's pre-Budget Report, I set up Infrastructure UK, to advise on how our country can achieve those vital goals. Today, it published a new strategy setting out a route map and the investment that will be needed. To deliver this ambition, which is vital for future jobs and the health of our planet, I am setting up an investment bank. It will control £2 billion-worth of equity, half of which will come from assets, including the channel tunnel rail link, and the rest will be matched by private investment.
	That equity will unlock billions more of finance from the private sector. The fund will focus first on investing in green transport and sustainable energy, in particular offshore wind power, where Britain is already the world leader. To strengthen the position further, we are offering £60 million to develop ports to host manufacturers of offshore wind turbines. That will help the UK to secure new inward investment deals and support thousands of extra jobs in these sectors.
	The UK has the potential to be the world leader in the digital economy. Realising this ambition would create thousands of new businesses and hundreds of thousands of new jobs. It would also open the way for public services to be delivered more effectively and at lower cost. Access to high-speed broadband is essential to deliver these goals. We have taken the decision to ensure that the benefits are spread to rural as well as urban areas and are not limited to the better-off. The 50p monthly landline duty will unlock private investment and enable 90 per cent. of the country to access the next generation of fast broadband by 2017.
	I now turn to how we will give targeted help to British industry to realise its global potential. The role of modern government is to work with key sectors to help them compete and prosper. We will not go back to the interventionism of the past, but nor can we return to the hands-off approach of the free-marketeers.
	It is also through partnership, not indifference, that Britain can and will succeed. It is a source of pride that 50 per cent. of all Ford diesel engines in the world are now produced in Britain's cutting-edge engineering plants. That is testament to the commitment of their staff and the high quality of their research and development, but the Government have also played a part, with financial support, in this success story.
	The Government, again, cannot develop and manufacture electric cars, but we can provide the support to help these projects to take place in Britain. The announcement by Nissan last week that it is to produce in Sunderland its first mass-produced electric car was a vote of confidence in British engineering and its work force, but this ground-breaking venture would not have happened without our support to unlock this private investment. It is precisely that co-operative approach that will ensure our country competes successfully on a global scale.
	The same partnership is being built in the life sciences sector, which already employs over 120,000 people. Our approach can be seen in the patent box, for example, which offers tax breaks on income from patents held in the UK. That will lead to more products being manufactured here in this country.
	Our creative industries are also a huge source of jobs, wealth and pride. I will offer help to the computer games sector, similar to the steps that are helping to restore the fortunes of the British film industry. It is a highly successful and growing industry, with half its sales coming from exports, and we need to keep British talent in this country.
	From advanced manufacturing to pharmaceuticals, and from digital communications to creative arts, it is the ideas that are driving their success. Building on the Hauser review, we will ensure that the UK's technology and innovation centres achieve their potential to commercialise new British discoveries. We have also strengthened the links between universities and business to ensure that ideas are harnessed for commercial success, but we need to do more, so we will set up a £35 million university enterprise capital fund to provide direct support for university innovation and spin-out companies.
	Along with the impact of new ideas, it will be the ambition of young people that will carry this country to success. We need to invest in skills, education and our centres of learning. Over the past 13 years, we have increased the number of places and funding for universities by 25 per cent. Almost 400,000 more of our talented young people now go on to university than in 1997. Given this unprecedented rise in investment and the need to tighten public spending overall, universities must make efficiency savings while focusing their funds rigorously on quality teaching and research. We are determined to achieve that without damaging key skills and our economic strengths. To help them to do this, we are going to provide extra one-off funding of £270 million in 2010-11 through a modernisation fund that will help universities to create 20,000 more university places, largely in key subjects such as science, technology, engineering and maths, starting in September this year.
	The extra places allow us to strengthen our offer to our young people and ease parents' concern that their child's first taste of life after school or college will be a prolonged spell on the dole queue. We have seen in past recessions what a waste of potential that was and the long-term damage that it caused. Because of the choices that we have made, every school and college leaver, as well as every recent graduate, under the age of 24 will receive personal help and new opportunities. That will be delivered by a guaranteed place in education or training for all 16 and 17-year-olds, a guaranteed job, work experience or training for every 18 to 24-year-old, supporting a higher number of apprenticeships, and more university places for those who want them.
	The cost of this £2.5 billion one-off growth package to invest in Britain's future will be met partly by switching resources from existing budgets and, as I said, by the higher revenues from the tax on bankers' bonuses. I expect that cost to be repaid many times over in the coming years in new jobs, new opportunities and greater prosperity.
	This recession has had an impact on people across the world. It is often the most vulnerable who are affected most-those in insecure jobs or on modest incomes. While people are suffering hardship, it is all the more unfair that some are escaping their tax obligations. I am determined to continue our successful drive to prevent avoidance and evasion.
	Measures in this Budget will bring in additional tax worth £500 million each year, while protecting £4 billion-worth of revenues by 2012-13. These steps include tax agreements such as that already signed with Liechtenstein, which is expected to bring in around £1 billion of extra revenue. I can also now tell the House that we are ready to sign tax information exchange agreements with three additional countries: Dominica, Grenada and Belize. I have a further announcement to make: we expect these deals to be signed within a few days, which is rather quicker than the 10 years it has taken Opposition Front Benchers to exchange information with the deputy chairman of their party.
	We are proud of our achievements in helping families and tackling child poverty. For the new born, there is an additional element of the child tax credit, as well as the child trust fund-something which, I know, will now be even better news for certain Members of the House. Pre-school children are benefiting from a massive expansion in free child care places, and I want to do more to help the parents of one and two-year-olds by increasing by £4 a week the money paid through child tax credit from 2012. That extra money will be paid for all children who need it, whether their parents are married, living together, or living apart.
	We have also tackled pensioner poverty. In 1997, hundreds of thousands of pensioners lived on a basic state pension worth about £62 a week. From next month, because of above-inflation increases in the basic state pension and the introduction of the pension credit, every pensioner will be entitled to a weekly income of £132.60. We have announced increased personal allowances for older pensioners, which will mean that, from April next year, no one over 75 will pay any tax on the first £10,000 of their income.
	The cold weather conditions of the past few months have underlined the importance of the winter fuel payment for many pensioners. Over the past two years, those payments were temporarily increased to £250, and £400 for the over-80s. Without action today, the winter fuel payment would have decreased in value this coming winter, but I have decided that that would be unfair, so I will guarantee this higher winter fuel payment for another year. That means that 9 million pensioner households will receive at least £250 this winter to help with their fuel bills. In line with our values and fairness, help for pensioners, families and homeowners over the coming year is paid for by closing down tax loopholes, as I have already announced.
	I believe that the Government have made the right choices to rebuild our public services. When faced with the upheaval of the global recession, we made the right choices to support the economy, businesses and families. Because of the steps we took, opposed by the Conservatives, the recovery has begun, unemployment is falling and borrowing is better than expected. The choice before the country now is whether to support those whose policies would suffocate our recovery and put our future at risk, or to support a Government who have been right about the recession, right about the recovery, and right about supporting people and businesses in this country to build a prosperous future. I commend the Budget to the House.

Provisional collection of taxes

Motion made, and Question put forthwith (Standing Order No. 51(2)),
	That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:-
	(a) Stamp duty land tax (relief for first-time buyers) (motion No. 5.)
	(b) Alcoholic liquor duties (rates) (motion No. 8.)
	(c) Tobacco products duty (rates) (motion No. 9.)
	(d) Amusement machine licence duty (rates) (motion No. 17.)
	(e) Insurance premium tax (separate contracts) (motion No. 42.)
	(f) Stamp duty land tax (partnerships) (motion No. 45.)- (Mr. Darling.)
	 Question agreed to.

Mr. Deputy Speaker: I now call upon the Chancellor of the Exchequer to move the motion entitled "Amendment of the Law". It is on this motion that the debate will take place today and on the succeeding days. The remaining motions will be put at the end of the Budget debate on Tuesday 30 March.

Budget Resolutions and Economic Situation
	 — 
	amendment of the law

Motion made, and Question proposed,
	(1) That,-It is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.
	(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide-
	(a) for zero-rating or exempting a supply, acquisition or importation;
	(b) for refunding an amount of tax;
	(c) for any relief, other than a relief that-
	(i) so far as it is applicable to goods, applies to goods of every description, and
	(ii) so far as it is applicable to services, applies to services of every description.- (Mr. Darling.)

David Cameron: So there we have it-Labour's big idea is a stamp duty cut on homes worth less than £250,000. Where on earth did they get that one from? That has been Tory policy for three years. The Chancellor came in copying our inheritance tax cut. He leaves as Chancellor copying our stamp duty cut.
	The only new ideas in British politics are coming from the Opposition. The only things that Labour brings are debt, waste and taxes. Here is a first. The centrepiece of this Budget, the stamp duty cut, has already been torpedoed by a Treasury Minister. This is what the Economic Secretary said about the policy:
	"raising...stamp duty...threshold to £250,000 would not be an effective use of public money".-[ Official Report, Finance Public Committee, 21 May 2009; c.108.]
	First, the Government denounce it, then they embrace it.
	That is not all. Remember our tax plan for super-strength cider? When we announced it, the Chancellor's spokesman said that that was illegal. It is now official Government policy. Remember our proposal for 10,000 extra university places? The Higher Education Minister said:
	"It is clear, as has been demonstrated in the House today, that this fatuous proposal of an extra 10,000 places is elitist"-[ Official Report, 16 March 2010; Vol. 507, c. 802.]
	That is what the Government said about it. Once again, they have been caught taking the public for fools. The Chancellor spoke for an hour. He could have done it all in a sentence. Labour has made a complete mess of the British economy and is doing nothing to clean it up.
	One figure in the Red Book stands out above all others. They have doubled the national debt and, on these figures, they are going to double the national debt again. In this election year they are borrowing £167 billion. We are meant to be impressed that that has turned out a few billion lower than the last disastrous forecast, but it is still-hon. Members should be ashamed of this-more than every single Labour Government in history ever borrowed, added up together. That is what they have done. Like every Labour Government before them, they have run out of money, and they are leaving it to the next Conservative Government to clean up the mess.
	Today the Chancellor had his last chance to do the right thing for the country. He totally failed.  [ Interruption. ] Labour Members are leaving. The taxis for hire are on their way out of the Chamber. The Government are just going to carry on spending, carry on borrowing and carry on failing. The biggest risk to our recovery is five more years of the present Prime Minister-five more years of falling confidence, five more years of bloat and debt and taxes, five more years of Britain closed for business. Most members of the Cabinet are looking at their Blackberries. They cannot think of a single reason why the country should have another five years of the Prime Minister, so I say let us have an election and put them out of their misery.
	Let us have a look in detail at the appalling mess that the Prime Minister and Baldemort seem to find so funny. Here are some of the things that the Government did not tell us in the Budget. They boasted about trade. They did not tell us that page 171 of the Red Book just published says that the trade deficit has risen by £7 billion. They told us about investment. They did not tell us that page 169 of the Red Book shows that business investment is falling by 5 per cent. this year. Almost everything that they have told us about the economy has turned out not to be true.
	The Government told us they would be prudent. The Chancellor has just said that they will borrow £734 billion over the next six years, giving us a national debt of £1.3 trillion. They have confirmed in the Red Book that the deficit this year at 11.8 per cent. of GDP is the worst in the OECD except for Ireland. That is what the Labour Government have left us with. They talked about education and its importance. Next year they will be spending more on debt interest than on educating our children. They told us endlessly that they had abolished boom and bust, but the figures show that they have given us the deepest recession since the war. The figures show that we lost 6.2 per cent. of our GDP in total.
	The Chancellor endlessly boasted about the action that the Government had taken. We have the longest and deepest recession since the war. They should be ashamed. They speak endlessly about their brilliant judgments, yet we were the first into recession and the last out of recession. They talk endlessly about their great judgment and about how well prepared we were. We went in with the biggest Budget deficit, and we come out with the largest Budget deficit. And of course they promised us real help now, yet more businesses went bust in this recession than in any other, and more people have gone bankrupt under Labour than ever before in our history.
	What about all the schemes that the Chancellor mentioned, which were launched with great fanfare? How many people did they help? Let us take the mortgage support scheme, which was announced in December 2008. The Government said:
	"This is real help for homeowners".
	So how many households did it help? Fifteen. That cost £66,000 per household helped; or, to put it in currency that the Cabinet can understand, that is about 13 days of Geoff Hoon's consultancy fees.
	The Government told us endlessly how brilliantly they had done on unemployment and what a triumph they had achieved. One in four adults of working age in our country are not in work. They talked about European comparisons. We have more young people unemployed than anywhere else in Europe.
	To be fair to the Prime Minister, there is one forecast that he got spot-on. He told an audience of bankers:
	"What you as the City of London have done for financial services, we as a government intend to do for the economy as a whole".
	That is a pledge he met in full.
	Thirteen years on from 1997, we can now see what has happened. In 1997, debt was £350 billion. Now it is getting on for £860 billion. In 1997 the deficit was £6 billion. That is what the Labour Government inherited-a £6 billion deficit. Today it is £167 billion. In 1997 we were ranked seventh in the world for competitiveness. Now we are 13th. We were fourth in the world for tax and regulation. Does anyone want to know what we are going to do? We are going to get back to fourth in the world for tax and regulation.

Barry Gardiner: rose-

David Cameron: The hon. Gentleman slept through the Chancellor's statement; I am glad to see that he has woken up for my reply. Does he know where we stand today? Having been fourth in the world for tax and regulation, we are now 84th and 86th. We have gone from the top of the premier league to the bottom of the conference in 13 wasted years-and we say that it is time to sack the manager. No wonder "Match of the Day" did not want him.
	So that is the mess: what about their plans to clear it up? Pitiful. The big argument in British politics today is this: they say, "Don't do anything before the election-let's just sit tight and keep our fingers crossed"; we say that we need real action to get our economy moving, and urgently. We need a credible plan to deal with Britain's record debts, starting now, and we need to show the world that we are back open for business.
	Let us start with the debt. The Chancellor repeated his hope to halve the deficit by 2014. Let us be clear about what this means. It means that in four years' time we will have a deficit almost as big as when Denis Healey went to the IMF in the 1970s. We are not the only ones who think that this is completely inadequate. The CBI has said:
	"Current plans to halve the deficit over four years are too little, too late."
	The OECD has said that
	"more ambitious fiscal...plans...would strengthen the recovery."
	The European Commission says that the Government's plans are "not sufficiently ambitious". The Prime Minister used to bang on about how we needed a "global early warning system"-do we all remember that one? Well, how many more warnings does he need? The lights are flashing and the alarm bells are ringing, but he is ignoring them and doing nothing for this country.
	A credible plan requires action now, and all we got was delay. The risk to recovery is not in dealing with the deficit now-it is in not dealing with the deficit now. The Prime Minister and the Chancellor are having a good chat-they are probably discussing what sort of fees they can charge after the next election. They should listen. Every family knows that when your debts mount up you need to start paying them off or things only get worse, and it is time for the Government to learn the same lessons. The Prime Minister and the Chancellor-

Gordon Prentice: rose-

David Cameron: Sit down.
	The Prime Minister and the Chancellor faced a choice between bold action in an election year and just playing politics, and once again they chose politics. This Prime Minister will never get a medal for courage-although it has to be said that most of his Cabinet get mentioned in "Dispatches".
	A credible plan also requires some honesty; instead, we got double-dealing. All those figures they told us about debt are based on their growth forecast. So let us have a look at the growth forecast-their record of predicting growth. In 2008, they said that we would grow by 2 per cent.; in fact, the economy grew by 0.5 per cent. In 2009, they predicted a decline of 3.5 per cent.; in fact, we shrank by 5 per cent. Now they say that the economy will grow by 3.25 per cent.; the independent experts say 2.1 per cent. The Chancellor told us, standing there at the Dispatch Box, that his forecasts were the same as the Bank of England's: they are not. The Bank of England is forecasting 3.1 per cent. this year and 3 per cent. next year, compared with his forecast of 3.5 per cent. With the former Chancellor, you used to have to go through the fine print before you found out about the rubbish in the Budget; this time, the rubbish came straight from the Dispatch Box. Having given us the lowest decade for growth since the second world war, they are now predicting one of the highest. They have given us the biggest bust in British history, and now they are forecasting an almost permanent boom. Why on earth should anyone believe what they say any more? What we need is a proper independent office of Budget responsibility, which we would set up to set independent forecasts and to keep the Chancellor honest.
	We need to get Britain back open for business. Again, this Budget completely fails the test. The Chancellor spent half an hour talking about helping business, but the fact is that he is raising £19 billion of extra taxes, many of them charged on business. Why? Because they flunked the difficult decisions on spending and they are raising tax after tax after tax. There are the fuel duty rise, the broadband tax, and the new taxes on small businesses. He talked about a cut, but he did not mention what happens on 5 April, when the revaluation and the end of transitional relief come in, hitting every small business in the country. Biggest of all is the rise in national insurance, which is a tax on every single job in our country. They want to tax your car, your phone, your business, and your jobs. These are the ticking tax bombshells that are timed to go off the day after the election, and that will destroy our recovery. Instead of more waste, more spending, and more taxes, what this Budget needed to do was to ease the burden on our families and businesses and let enterprise flourish. That is what a Conservative Government will bring. Let us freeze the council tax. No tax on new jobs for new businesses. Lower corporation tax rates and lower small business tax. Radical school and welfare reform. That would be real action to get our economy moving.
	This Prime Minister is going around telling everyone, "Stick with me-stick with what you know." But that is the whole problem-this country is stuck with him. Our economy is stuck. Business is stuck. Nothing is moving. Then there is the arrogance of it. "Stick with me." "Why?" "Because I doubled the debt, I put up your taxes, I wrecked the economy, and I mortgaged your children's future." It is like the captain of the Titanic saying, "Let me command the lifeboats." It is like Robert Maxwell saying, "Let me reinvest your pension." It is like Richard Nixon saying, "I'm the man to clean up politics." Does the Prime Minister really expect the British people to turn round and say, "Thank you for nearly bankrupting the economy?" Find me the small business owner who would wake up to a Labour victory and say, "Thank God we've got five more years of this red tape and taxes." Find me the family who would think, "Great, national insurance is going up and we're all going to be better off." Find me the international business that would think, "Yes, now's the time to invest in Britain." No one has yet thought of a question to which the answer is five more years of this Prime Minister-and that's because there isn't one.
	We need an unleashing of enterprise across this nation. We need a plan to boost employment through welfare and school reform. It is time that this country had a radical change of direction. We need a Conservative Government to clean up the mess made by this Labour Government and to stop another five years of debt, waste and taxes. Britain does not need this Prime Minister and this Chancellor-it needs new energy, leadership and values to get this country going again. That is the argument that we will take to the country the moment this man runs out of time and calls that election.  [ Interruption. ]

Mr. Deputy Speaker: Order. The House should also hear the response of the leader of the Liberal Democrat party. Can I say to the House, as many hon. Members seem unaware, that there is a clear convention that the responses to the Budget by the Leader of the Opposition and the leader of the Liberal Democrats are not interrupted?

Nicholas Clegg: This Budget has been billed as the preface to the Labour manifesto. Based on what we have seen today, it will not be a manifesto but an obituary. The Prime Minister may have wanted a "giveaway Budget", but what we got was a "given up Budget". This is not the preface to a new Government but a footnote to 13 years of failure. After 13 years, the gap between rich and poor has widened. The poorest 20 per cent. pay a higher proportion of their income in tax than the richest-so much for fairness under Labour. We have had the most prolonged recession since the 1930s, and the spectacle of state-owned banks doing deals that put British people out of work. We needed real change. We needed a Budget that gave us honesty on spending and fairness on taxation. We got neither.
	The spat that we have just seen, with the Leader of the Opposition saying that cuts should come now, is a phoney war about when to make cuts to cover up the fact that he and the Chancellor are both the same. Neither has the courage to come up with the details of the cuts that we will need in the years ahead to tackle Britain's deficit. Neither is being straight with the British people about the tough times ahead.
	This Budget was a Budget in denial about the scale of change needed-it was about as honest as the CV of the right hon. Member for North Tyneside (Mr. Byers). It is built on growth figures that are unlikely to materialise. It is built on false comfort from a small drop in borrowing that does not affect the structural deficit; we are still borrowing £450 million every single day. Above all, it is a Budget in denial about the unavoidable cuts and savings ahead. The Chancellor claims to have identified billions of pounds of cuts, but there is only real detail about a tiny fraction of the total. Everything else that we have heard today is insubstantial waffle about so-called efficiency savings and a tiny saving in the relocation of civil servants to places outside London.
	On the other side of the Chamber, we have heard tough talk about the need to be honest on the deficit, but the Conservatives have barely a fig leaf of detail to back up their claims. They say that we need more than £40 billion of cuts by the end of the next Parliament, but they have published details about just £2 billion. Their demands for honesty come straight from the Karl Rove school of politics: make the biggest fuss about the subject on which you have the most to hide. Labour is in denial and the Conservatives are talking tough to cover the truth-they offer more of the same.
	We needed a Budget that gave us honesty in spending and fairness in tax. We got neither. We Liberal Democrats are putting our cards on the table. We have identified a first instalment of £15 billion of cuts that can be realised by 2012-13: saving £500 million a year by ending Government contributions to child trust funds; saving £1.3 billion a year by stopping means-tested benefits for the top 20 per cent. of tax credit claimants; cancelling identity cards and second-generation biometric passports, saving £2.5 billion over the next Parliament; and making longer-term savings, too, by saying no to the like-for-like replacement of Trident. Those are savings that we will need to start implementing once the economy is strong enough to take the strain. The Chancellor could have made some of those choices today, and so could the Leader of the Opposition, but what do we hear from both of them? Nothing. Lots of noise and no honesty whatever.
	One of the Government's most shocking sleights of hand in recent months has been to try to duck blame for the recession. Yes, there were global forces at play, but most of the problems started right here at home-the over-dependence on the banking industry, the personal debt bubble encouraged by this Government and the over-inflated housing market that Labour did everything in its power to stoke up.
	On the stamp duty reforms announced today, of course we welcome any moves to make the system more progressive, but with 1.8 million families still on a waiting list for an affordable home, it is quite astonishing that this Budget was completely silent on the urgent need for more affordable homes for all. The Chancellor has added to that by a change to housing benefit announced today that will make life impossible for low-income families in high-price areas such as London. Labour should stop trying to kid people about this recession. They got us into it, and only by being honest about how we got into this mess will we ever be able to get out.
	I turn to a few details of today's Budget. The Chancellor has only slightly modified his wildly over-optimistic growth forecast, to between 3 and 3.5 per cent for 2011, against a consensus everywhere else from independent forecasters of 2 per cent. He cannot bury his head in the sand just to hide the truth about how long it will take to reduce the deficit.
	The Chancellor spent a good portion of his speech boasting about the £11 billion he claims to have saved on unemployment costs and through unexpected higher tax revenues. He is living in a fantasy land. This Government still came in £167 billion over budget last year. That is no record to boast of. Someone living off their credit cards and thousands of pounds in debt is not suddenly flush with cash just because their phone bill comes in slightly cheaper than he predicted. We are not better off; we are just ever-so-slightly less worse off.
	Even with unemployment lower than originally forecast, we still have more than 2 million people unemployed and 8 million economically inactive. Of course it is sensible at a time of mass unemployment to direct money to help young people especially. I only wish the Chancellor had had the courage to go further and shorten the guarantee for young people from six months to three months. One in five young people are still out of work, and waiting around for six months before they get any help pushes many of them into a state of real desperation.
	I welcome, of course, the way the Chancellor has more or less carbon-copied our long-standing proposals for an infrastructure bank and support for green industries to stimulate more job creation. On fuel duty, I note the Government's decision to stage future increases, but they are missing the point. There is a fundamental problem with fuel duty in rural areas where using a car is not a luxury but a necessity. The real priority should be to help rural areas, not just a staged reprieve.
	One of the most shocking omissions from this Budget was the failure to address the systemic failures in our banking system. We bailed out the banks to the tune of £1 trillion, and they are hoarding money that should instead be lent to businesses, killing off sound businesses and people's jobs. The banks are even helping to support deals that put British people out of work, such as the Kraft takeover of Cadbury.
	The failure to get the banks lending is the absolute centrepiece of the Government's economic mismanagement. The Chancellor today promised new bank lending targets, but why should anyone believe a word he says after what happened last time he made such promises? RBS and Lloyds were told to increase net lending by £27 billion. Instead, they have decreased it by £41 billion. Moving to gross rather than net lending targets is a con that will let the banks off the hook again.
	The Government must now recognise that their heavy pressure on the banks to rebuild their capital bases is limiting bank lending and threatening the health of the economy in the longer term. The banks end up hoarding money instead of lending it. The priority for the nationalised banks in particular should be putting money into the real economy, not into their balance sheets.
	Turning to bankers' bonuses, the Government raised more than £2 billion-more money than they had expected-from their tax, but that is because the banks refuse to change their behaviour. It is amazing how much the banks are willing to pay to get back to business as usual. A decent Budget would have set out a plan to ensure that they can never do that. We must ensure that the high street banks on which families and small businesses depend are never again put at risk by the casino culture of investment banking. As the Governor of the Bank of England has repeatedly recommended, we need to separate high street and investment banking for good. Until that split is introduced, all banks will remain the beneficiaries of a unique, open-ended guarantee against failure from the taxpayer-a guarantee that they should pay for. That is why last year we proposed a new levy of 10 per cent. on the profits of the banks until they can be split up.
	I will give the Chancellor credit at least for some consistency. He has always opposed our plan for that, as he has today, while the Conservatives first ruled it out, then ruled it in, only for their latest proposed bank tax to fall apart in less than 24 hours. Both parties are wrong. Britain is unique in the world in the liabilities of our banking industry relative to the size of our economy. We do not have the luxury of time and we have to protect ourselves against a future collapse.
	Finally, on tax, the other gross disappointment in this Budget was the failure to make our tax system fair. Under Labour, the bottom 10 per cent. pay a staggering 48 per cent. of their income in tax, while the richest pay 34 per cent. The Chancellor took pride in saying today that he would make no big announcements on tax. How can he look at a system such as that and say, "Let's have more of the same"? Indeed, his comments seemed to suggest a freeze in income tax rates, which would, if earnings rise, once again hit the poorest hardest. So much for fairness under Labour. How can he happily accept that it is okay for a banker in the City of London to pay a far lower rate of tax on their capital gains than their cleaner does on their wages? So much for fairness under Labour.
	The Liberal Democrats propose the most radical tax reform in a generation, hard-wiring fairness into Britain's taxes once and for all. We will ensure that no one pays tax on the first £10,000 that they earn, paid for by closing loopholes that unfairly benefit those at the top, by a mansion tax and by higher taxes on aircraft. That would mean complete freedom from income tax for 3.6 million more low earners and pensioners, and £700 in the pockets of tens of millions more. Crucially, it would be a down-payment to the British people, who are about to take the brunt of the biggest fiscal contraction in post-war history. It would be a declaration of intent-yes, there will be change, but we guarantee it will be fair. Action on tax is the only way to ensure that we can take people with us down the difficult road of deficit reduction. Only the Liberal Democrats are prepared to make real changes in tax to help the millions of people who simply need a break.
	After 13 years of Labour, Britain is ready for something different. As we stand on the brink of an election campaign in which there is everything to play for and the future of the country is at stake, my message is simple: this Budget is the old politics, and the old politics is not good enough any more. It is time for honesty in spending and fairness in taxes, and the only party that offers both is the Liberal Democrats.

John McFall: I welcome the Budget and commend the Chancellor for his stewardship over the past year. Not only the leader in  The Times this morning but individuals I have spoken to in the City over the past year have remarked on his stewardship of the economy.
	The results of the banking crisis, though, remain with us to this day. Whether it is higher unemployment or difficulties getting credit, people are still feeling the effects. We must recognise that that still has the potential to generate public anger and resentment. It is safe to say that the message that was repeated to us at the time of the pre-Budget report was that the outlook was uncertain. For instance, the Treasury Committee stated:
	"The picture on bank lending remains uncertain, to say the least. While we do not want to return to the times of easy credit, the Government must remain aware of the risk that lending will not support renewed private sector growth as the public sector retrenches."

John Redwood: I am grateful to the Chairman of the Treasury Committee for giving way. Is the right hon. Gentleman aware that, last year, in respect of Lloyds bank, which is partly state owned, the amount of loans outstanding fell by £50 billion, despite all the ministerial exhortations?

John McFall: The Treasury Committee has persistently focused on that issue, and this morning I was at a business breakfast with small business representatives, who outlined the problems with lending. At the time, we said to the Chancellor that the lending agreements had to be more transparent-there is a problem with them-but I welcome the additional £90 billion that the Royal Bank of Scotland and Lloyds will provide. We really need to get that lending to small businesses, so the initiatives in the Budget are welcome.
	To some extent, however, the uncertainties, whether about credit or the wider economic outlook, remain. The fear of a double-dip recession raises its head every now and again, and monthly data releases are analysed to within an inch of their lives-only to be revised in the following month. In the face of those uncertainties, the Government must act as a buffer, providing support to the economy as the private sector recovers from the banking crisis and resultant recession. That of course has a worrying effect on the public finances, but at times of crisis it is necessary for a Government to support people. The Government must ensure that hope for a better future is not lost, and that will be a theme of the general election. Yes, times are difficult, but we must offer hope and a future to people if they are to maintain their faith in the parliamentary system.
	None of us can deny that the choices that we are to make on spending or taxes are difficult, and good decision making requires accurate and timely information. That is why the Treasury Committee, in its report on the pre-Budget report, urged the Government to provide more information. On one such point, we noted:
	"There is a sense that the Treasury are using uncertainty to suit themselves. Despite substantial uncertainties they still produce some forecasts out to 2014-15 and illustrative projections out to 2017-18. We can see no good reason for the Treasury failing to produce illustrative figures for future expenditure, at least the projected split between DEL and AME. We recognise that there will be uncertainty in these figures, but they are produced as part of the Spending Review process".
	So, with the spending review process in the autumn, I look forward to those figures becoming clearer.
	The deficit will have to be tackled, but perhaps more importantly it has to be seen to be tackled. We must satisfy the markets and, more importantly, the people that the deficit is in hand, regardless of our political affiliations. I should like to offer the following notes-some may say, crumbs-of comfort from the Governor of the Bank of England, who, at the Treasury Committee's hearing on the February inflation report, said:
	"I think it is very clear we have political consensus on the need for fiscal consolidation. We have a very good track record in the past at meeting our obligations. We have our own currency which gives us greater freedom of manoeuvre and we also have a public debt which has a much longer maturity so that we are not faced with the same rollover refinancing problems which affect many other economies. The UK should be grateful that we have the maturity of our public debt which is almost twice that of any other country."
	That comment is very important, particularly in the face of the deficit hawks who want to cut now and cut severely.
	We must tread the path of the next few years carefully. The public sector will have to step back and allow the private sector to play a leading role in growing our economy, but we must ensure that the timing is right and we do not crowd out private sector growth with too much debt-fuelled public sector spending. [Hon. Members: "Hear, hear."] But, the dangers are equally treacherous on the other side. If the private sector is so sickly, as it is at the moment-whether owing to a lack of confidence or credit, or because it cannot grow as fast as needed-we risk losing more people to unemployment. So I welcome the Government's commitment to support people and businesses during these difficult economic times.
	There is some evidence to show that the Government's action on the economy is working-the number of companies being wound up falls far short of the numbers seen under the previous Tory Government in 1992. To withdraw that support too soon, in the name of balancing the books, would be nothing less than economic suicide. Thousands of people's livelihoods depend on that support remaining in place until the economic recovery is secure. If we were to withdraw it, the fiscal position might deteriorate, not improve, because we would have to deal with the costs of mass unemployment and mass business insolvencies. They would not just represent short-term costs on the public purse, but would create lasting, long-term problems. Mass unemployment turns into worklessness, as we saw in the 1980s, and unnecessary business insolvencies lead to permanent losses in the skills and productivity of the UK's work force.
	The Treasury Committee was especially concerned about young people in the current economic climate. We noted:
	"We remain concerned over the levels of youth unemployment. While the story for the overall labour market has been more positive than might have been initially hoped at the start of recession, the young have, as we feared, been badly hit. We note the Government's measures in this area, and will continue to monitor their impact."
	I welcome the measures on youth unemployment, because I speak not only as a parliamentarian, but as a former school teacher: one who taught in the '70s and '80s; and one who met his former pupils 10 years later, married or with partners with children, and asked them whether they had a job. They told me no. The impact on many young people, and at an early age, is terminal, and that is why we have to support them through that time of hardship.
	Let us not forget that 600,000 young people leave full-time education each year, and it is vital that they have education, training or employment opportunities. Labour market economists, supporting what I said earlier, say that a person who suffers six months' unemployment aged 18 can feel the effects for decades. Even when they reach 50, they might still earn less than they would have had they not been unemployed. So, without the Government's targeted support for young people, we could go back to the 1980s and see a new generation of worklessness in the UK. All of us must strive to ensure that that does not happen.

Christopher Huhne: I entirely agree with the importance of ensuring that we do not throw a whole generation on the scrap heap, but, given that the right hon. Gentleman just said that six months is a long period to allow people to go without work and without developing the habits of work, does he agree that it would be better to adopt the proposal of a three-month period before the guarantee came into effect?

John McFall: That is an idealistic position. I do not know enough about the statistics in terms of three months or six months, and some young people get lost in the statistics. The important thing is that we help people after six months, but if it were felt that there was a detrimental effect after three months, and if it were possible to implement the proposal, I would quite happily support the hon. Gentleman's suggestion.
	I mentioned public anger, but I shall refer to that later, because I mentioned also financial inclusion, and I certainly welcome the Government's policy on basic bank accounts. As the Chancellor and others know, the Treasury Committee from the previous Parliament forged the policy to ensure that we have a 10-year plan for financial inclusion. We pushed very hard for the Government to act on the problem, and all of us must realise that banking is not a luxury, but vital for our society and our economy.
	There was a social contract between the banks and the public: as long as the banks were able to provide basic, essential functions to the public, particularly saving and lending, bankers' bonuses and excesses were tolerated. But no more. With the onset of the financial crisis, the banks stopped being able to carry out those functions, people no longer felt that their money was safe and the banks stopped lending to businesses and households. That social contract has broken down, and we must bear that in mind for future policies.
	Considerable public anger is now directed at the banks, and that is understandable given the economic difficulty that many families face. However, given the importance of financial services to the economy, we will not have a secure economic recovery until the financial sector is also on the road to recovery. So it is important that we address the issue of concern and public anger, and restore confidence in the financial sector.
	I mentioned financial inclusion. The Government's proposals on basic bank accounts is very welcome, and work is being done already by the Financial Services Authority and the Treasury in respect of data for banks on where people open accounts and where lending is made to businesses and individuals. However, all of us have seen, in our own areas, the proliferation of cheque cash shops, payday companies and doorstep lending in places with little or no banking provision. We need clarity about to whom the banks are lending and not lending. For example, there is a lack of access to cash machines in ethnically diverse areas-a fact that has more potency than a diversity indicator itself. Underneath the figures lies an explanation for why we lack sufficient provision of those basic bank accounts, and we need to go further to ensure that we get that information across.
	Even today, 1.75 million people do not have a bank account.

Robert Smith: I would like to take this opportunity to thank the right hon. Gentleman for his service to the House as Chairman of the Treasury Committee. However, will he expand on the role that the post office network can play-there is a meeting about this later-in opening up the banking system to many people who are currently un-banked? That trusted brand could work in the basic banking sector, meeting the needs in local communities that have no outlets of any other financial institution. Perhaps more should be done to drive forward the concept of the post bank.

John McFall: I agree with the hon. Gentleman. As he knows, our Committee and others did some work on the Post Office card account and the struggle to retain it. That is important, but we have to take it a step further. A Post Office card account itself is insufficient, because it provides limited services. The ambition for the Post Office, over the next eight or 10 years, is to be a financial services provider, so that there is solidity in Post Office services. That is quite an ambition, but it is very important, given that the Post Office is a trusted brand, as he said, and given that 95 per cent. of the population live within a mile or so of a post office. We need to encourage the Post Office to get that facility going. I am a little discouraged by the fact that Alan Cook, who used to run National Savings and Investments, and then joined the Post Office and drove this agenda, is now leaving. However, we need some added urgency, and I look forward to further Government measures on it.
	It is not enough for people to have basic bank accounts, because figures show that 60 per cent. of those with such an account make full withdrawals every month. In other words, they do not use the direct deposits of the bank system, and they do not use their bank accounts to pay their utilities bill, which would make them cheaper. At the moment, basic bank accounts for such people are meaningless, so we need to do more work-simply having a basic account is not the answer.
	The money guidance service set up by the FSA has a crucial role to play in the financial inclusion agenda. For example, arising from discussions with those involved, I have been told that the majority of people over 60 do not claim pension credit, and that lots of people in social housing do not have basic bank accounts. I would like to think that a number of organisations, not least the money guidance service, could be tools of financial inclusion. That agenda has to be pushed and promoted even more.
	On Monday, the Treasury Committee unanimously agreed three reports, and in the next week or two, we will be putting them out. A feature of our Committee has been that we have considered the evidence and agreed our reports on the basis of unanimity. The report that I consider the most important relates to the issue of banks being too big to fail and too important to ignore. Let us remind ourselves that the crisis has cost 25 per cent. of global gross domestic product, and that the reason for the crisis was that financial institutions took part in risky activities that were both mispriced and misallocated. The bail-outs, necessary though they were, have not ended the mispricing.
	The bail-outs have shown that there is an implicit subsidy to banks and financial institutions, which is unfair when considered in relation to other businesses. Banking reform is essential, therefore, to ensure a more stable and less volatile system. That is essential in the United Kingdom, where the banking sector is worth 500 per cent. of our GDP. The fact is that we have big banks and limited choice, and as a result we have insufficient lending to non-financial institutions, as anyone who speaks to the CBI, small businesses or the manufacturing industry will hear. Banking reform in the UK is essential.
	I urge the Government to ensure that banking reform takes place, irrespective of what is happening elsewhere. The visits undertaken by the Treasury Committee in the past six months to a year, whether to the United States or Europe, have impressed upon me that countries' electorates will not tolerate a second bank bail-out. I suggest to the Government that the test of reform will come when the risk is transferred from the Government to the banking sector, and a large financial institution is allowed to fail smoothly. As others have said, banking is currently in a position where it privatises its profits and socialises its losses. We have to eliminate that practice.
	We have to have engagement with the public. At the moment, that engagement is insufficient. In October 2007, the Treasury Committee visited Japan, and I spoke to policymakers at its central bank. They said that we should take back the message that two things are essential: first, that we have to recapitalise our banks-and recapitalise them early-which the Government have done. Secondly, we need a strategy to deal with the public anger, concern and resentment. I have taken that message forward and helped to establish the Future of Banking Commission, which the right hon. Member for Haltemprice and Howden (David Davis) has agreed to chair, and which the hon. Member for Twickenham (Dr. Cable) has agreed to sit on. We also have the eminent economist, Roger Bootle, and others on the commission.
	We have established the commission to look to the future and ask basic questions about what the banking system is for and how it can best serve the interests of customers and regional economies. Those are basic issues, and we would like to present our report to the next Government in June. We want to take forward the message that financial architecture change is essential. However, that will not take place in the next two years-it will take quite a long time. I say that because Basel II took 15 years. So we are in this for the longer term, and it is important that politicians and policymakers stand side by side in ensuring that we get a better, more stable and reformed banking system as a result.
	As kindly mentioned by the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith), this will probably be my last speech in the House. I well remember reading the late John Biffen's autobiography. He had a flat on the south side of the river, and he came across Waterloo bridge everyday. He said that, during his long time here, when he spied the House of Commons every morning, and entered it, he got a bit of a thrill. I share that sentiment. It has been a privilege for me to represent my area in this Parliament, and I am grateful to lots of people, including not only my office staff, but the staff of the House. The House is a very fraternal institution. It might not look like it from the outside, but people are always ready to help others. The attendants, police, and the staff in the Tea Rooms, are always very welcoming and warm. I will miss that.
	I will also miss the Treasury Committee staff. When I give speeches in the City and elsewhere, it is clear that people think that the Committee is a Department serviced by an awful lot of people. In fact, there are only six people involved, together with three economists. We seem to have done a bit of a David and Goliath exercise, and kidded people that we are the equivalent of a Department of State. The effort that the staff have made over the nine years that I have been on the Committee has been enormous.
	I also want to pay tribute to all my Committee colleagues, particularly the hon. Member for Sevenoaks (Mr. Fallon), who has been the Chairman of the Sub-Committee. I see other Members here who have also been part of the Committee. We have always made it our business to take the evidence and to produce unanimous reports. The unanimity of those reports has given out a profound message and helped to inform the debate here. I hope that it has also helped to build a bridge to the public, to help us to ensure that public engagement is restored. The past nine years have been the most fruitful years in my parliamentary career.
	Lastly, I would like to thank my family and my constituents, who have supported me consistently for 23 years. Some people have asked me why I am giving up now. I remember that when Terry Wogan left Radio 2, he said, "I'm giving up now because we're still in love and the music is still playing." Well, the music is still playing for me. I wish everyone who is going to be part of the next Parliament every success in rebuilding trust and confidence in this institution, which is the bulwark of our democracy.

Peter Lilley: It is a great privilege to follow the right hon. Member for West Dunbartonshire (John McFall), who has played a distinguished role in our economic debates over the years. I wish him well in his retirement. His contributions will be long remembered here.
	The Prime Minister-both as Prime Minister and as Chancellor of the Exchequer-has always believed that words were a substitute for reality. He believed that simply by repeating his commitment to prudence, he could distract people's attention from his practice of imprudence, which involved building up the largest unsustainable growth in expenditure that this country has experienced in many a long year. He believed that by repeating his assertion that he had abolished boom and bust, he could make us think that he had done so, until the reality exposed him and burst his credibility.
	Now, the Prime Minister asserts that the problems are all global, and tries to convince us that he had no part in the problems and could have done nothing to mitigate or avoid them. However, two Anglo-Saxon economies similar to our own-Canada and Australia-were prudent and did not go in for excessive boom. As a result, they avoided the rigours of the bust when the problems hit countries such as Canada's near neighbour. So, more could have been done in this country to mitigate and prevent the problems from which we are suffering, of which this Budget is a symptom. We could have avoided the present levels of non-employment, for example. The Government claim that the unemployment figures are encouraging, but they do not tell us how many people have withdrawn from the labour market because they are discouraged, and because there are no jobs available.
	Ultimately, however, the problems that we face can be summed up by the size of the deficit that we face. The Chancellor has tried to convince us that because the forecast of £178 billion has come down to the current estimate of £167 billion, that would somehow make a significant difference to the scale of our concerns. But £167 billion is unprecedented. It cannot for an instant be tolerated, excused or minimised. There are only three ways to reduce the deficit. The first, and worst, is to raise taxes. The second, better, way is to cut spending. The best way is to encourage growth. Raising taxes might be unavoidable, but if we are elected to government, we will do all we can to avoid raising taxes.
	By contrast, raising taxes is the first choice of the present Government. They have already put up taxes today, stealthily and with little mention, by an extra £19 billion, as my right hon. Friend the Leader of the Opposition pointed out. That is a burden that we have already had to pay. When the Prime Minister was asked what action he had taken to reduce the deficit, the three measures that he mentioned were all tax increases. That is this Government's instinct and their practice, and if they are returned to office we must fear that such measures will form the bulk of what they introduce. It is inevitable that they would be forced to introduce measures to reduce the deficit more quickly than they are now proposing, in rather unspecified ways.
	Better than raising taxes is cutting expenditure. Indeed, even the Labour Chancellor recognises that large reductions in spending are required, even with the higher taxes that they are proposing and those that they have already introduced. The Institute for Fiscal Studies has pointed out that, on the Government's own projections, they are set to undo almost all the increases in expenditure that they introduced over the first 10 to 12 years of the Labour Government. The Prime Minister is a "Duke of York" leader, who marches his party, and the country, up to the top of the hill with massive and unsustainable increases in spending, then marches us down again, while undoing them. It is small wonder that he has not spelled out in detail any proposals in a spending review. That has been postponed until beyond the election, because it would be the ultimate confession of failure if he were to spell out in detail what he needs to do.

Anne Main: Does my right hon. Friend agree with the businesses of St. Albans that as the Prime Minister was not a very good Chancellor in the good times, they have much more to fear in the bad times? He was very business-unfriendly in the good times, and they are fearful for their businesses now that there may be bad times ahead.

Peter Lilley: My hon. Friend is absolutely right. Many of the businesses in her constituency employ people who live in my constituency, and they share the view that she has just expressed.
	If we are to cut spending, we must try to do so without cutting services. That goes without saying. There is huge scope for doing that. If the public sector had matched the productivity increases of the private sector, rather than undergoing a productivity decline, much of what is required to get the deficit down would simply not be necessary. In short, the failure to achieve efficiency in the public sector is the cause of the problem, and the reason why there is now scope for making savings without making cuts in services. The Labour Government are prepared to tolerate waste and inefficiency, and they place no requirement on the public sector to match or emulate the constant improvements in productivity that are required in the private sector. That provides the problem, as well as the scope for reducing it.
	We want to get on with the job. We do not want the savage cuts that the leader of the Liberal Democrats was calling for-although he seems to have resiled from that position recently. We want to get on with the job, because the sooner we tackle the problem, the less painful it will be. It is just like tackling an illness: the sooner we start to treat it with antibiotics, the less likely we are to have to resort to surgery. The sooner we start to cut the deficit, the less painful it will be. Departments would be able to rely on freezing recruitment, rather than introducing redundancies. If redundancies were necessary, they could be voluntary rather than compulsory. Starting the process now would be less painful than having it forced upon us after the election, without preparation. Another Labour Government would be forced to start that process, were they returned to office.
	We do not believe that starting to take these measures would destroy the recovery. Nor, of course, did the Government, as the Institute of Directors has pointed out. A Treasury document from back in 2003 said that there could be such as thing as an "expansionary fiscal contraction"-reducing the deficit with expansionary effect. It said that such a contraction
	"is most likely when a country is facing a critical fiscal situation and takes strong action by cutting unproductive spending, and this is accompanied by further structural reform and an exchange rate depreciation."
	In precisely the circumstances we are now in, a reduction in the deficit is likely to have an expansionary effect through restoring confidence, releasing resources and enabling one to take a more relaxed monetary policy than would otherwise be the case.
	The best solution to our problems is the restoration of growth. Growing economic activity, with growing tax revenues and reduced unemployment, must be the best way to eliminate a large part of the deficit, but restoring economic growth depends on three things. It depends on confidence, it depends on cash, and it depends on a competitive exchange rate. I believe that the process of getting on with tackling the deficit will itself have a positive effect on confidence, as it did in previous recessions when we finally began to tackle the problem. A new Government will help restore confidence in the economy, too, as people see that those who got us into the problem are no longer being relied on to get us out of it.
	As for more cash, people talk about the Government reducing their spending and taking cash out of the economy. What puts cash into the economy is banks lending more than they receive back in repayment. That is what creates cash in a modern economy. If we are to have a growing economy, we must have a growing money supply-not outstripping the growth of the economy, but growing in line with it and with its potential. We are not seeing that at present. We have seen the banks taking back more money than they are lending out, and we have seen a reduction and a tendency for the money supply and the economy to decline. We want to see the Government ensuring that the money supply grows in line with the underlying capacity of the economy. It can do so by quantitative easing. If it does, I hope it will do so more by ensuring that such easing takes place through dealing with private sector rather than public sector liabilities-exchanging them for cash and getting that cash straight into the private sector. That must be done.
	The final element is a competitive exchange rate. That, thank heavens, we have. We have it solely because we were wise enough not to enter the euro area, so we have a more competitive exchange rate than we otherwise would have had. That gives us an opportunity, not a certainty. It is vital that we take that opportunity and create conditions of which our businesses can take advantage. I believe that we will be in that happy position only if we get rid of the Government who got us into this problem and replace them with a Government who have competence, confidence and the commitment to getting our problems under control as soon as possible.

Stuart Bell: I am grateful to be called so early in the debate, and to follow the right hon. Member for Hitchin and Harpenden (Mr. Lilley). He was talking about the imbalance between services and manufacturing in our economy, which developed over many years. In fact, I believe it has developed over about 30 years. We must not underrate what manufacturing industry does for our country, employing about 2.6 million people in the UK. In 2007 it accounted for 12.5 per cent., or £154.9 billion, of our national economic output. I was very pleased to hear from the Chancellor today about a number of measures to help our industry and to help the small and medium-sized business sector.
	I think that even the right hon. Member for Hitchin and Harpenden would agree that we are living, and have lived, through a worldwide recession. Although it is perfectly normal and natural for him to blame that on the Government, all Governments in the industrialised western world of whatever colour or political persuasion followed the same route. That applies to Germany, France, Spain, Italy and any other such country. It was the only route to save the nation. Everyone knows that.
	The Leader of the Opposition talked about the worst recession since 1945. He had to be reminded, as he was by the Chancellor, that the recession did not become a depression. When we talk about unemployment, we recall all the forecasts and statistics suggesting that it would rise to 3 million, but that never happened. The measures that we took to reach the economic situation today have kept this nation on an even keel.
	The right hon. Member for Hitchin and Harpenden made a fuss about the debt standing at £167 billion. The Chancellor said, however, that revenues from Her Majesty's Revenue and Customs have brought it down to £163 billion. It is very high; we accept that. It is, to use a phrase used by a Conservative Chancellor in another context, a "price well worth paying" to save the nation from what would have been a very serious depression.
	The right hon. Gentleman also mentioned cutting public expenditure. We fully understand that this is a basic element of Conservative policy. Margaret Thatcher-now Lady Thatcher-did precisely that in 1979: she reduced public expenditure and she reduced the public services. The right hon. Gentleman needs to explain to me how he can cut public expenditure without cutting services. Of course, he draws a distinction in respect of front-line services, but the fact is that the Conservative party policy is to cut public expenditure and to balance the books. We understand that; it is the philosophy that Conservatives have.
	If we really want to understand Conservative party philosophy, we can look across to the United States and the Republican party, which has fought tooth and nail to prevent a national health service of some description from taking its place in their country and economy. That is a remarkable fact; it is what the Republican party stands for. In our country, it is the Conservative party that stands for balancing the books. The phrase is often used; it is perfectly normal and natural, but it is also a policy, and it will have consequences.
	I agree with the right hon. Gentleman when he says that his party will not go down the route of the savage cuts suggested by the Liberal party-the £15 billion-worth of cuts they have promised us if they were in government, which would have an extraordinary impact on the British economy.

Ian Taylor: I am trying to follow the hon. Gentleman's argument. There is no disagreement between the two main parties that cuts are going to have to come, so the matter is purely a question of timing. The hon. Gentleman's argument is effectively that the Labour Government, if they were to remain in power, would also have to cut services.

Stuart Bell: I am grateful for the hon. Gentleman's intervention, but the Chancellor of the Exchequer has laid down a policy of deficit reduction over four years up to 2014.  [Interruption.] Well, there is a balance in the economy. We have talked about growth, and the right hon. Member for Hitchin and Harpenden talked about growth, cuts and taxation, so there is a balance. There will be a review of public expenditure a little later on in the year.
	If one wants to argue the toss about what cuts we might make, I can tell the right hon. Gentleman and the House that we would not cut the work of public sector workers in health, education, social services or local government. All those people serve the community; they are not simply public sector workers for the sake of it; they serve our community and they help the disadvantaged in our communities, trying to get them into work.
	There is a balance between public and private sector, but the Conservative balance is not a real balance, as it is biased towards cuts. When we hear it said that they must "start tackling the problem", does that mean an emergency Budget, in the unlikely event of a Conservative Government? Conservative Members nod their heads. Will it mean emergency taxes as well as an emergency Budget being imposed on our public sector workers, destabilising our economy? Is that what the Conservative party promises? We will take that message to the country. Which of our public sector workers-our health, education, social services and local government workers-will lose their jobs? If there were to be a Conservative Government and an emergency Budget, those people should be told-and we will tell the nation.

Stewart Hosie: Will we not also be able to tell the nation, quite clearly, that the Chancellor was explicit about the £57 billion reduction in the economy that would take place in 2013, one third or so through tax rises and two thirds-about £40 billion-through cuts? Will we not be able to confirm to the same public sector workers that the Labour party is intent on making the same cuts? The hon. Gentleman's arguments simply do not add up.

Stuart Bell: I can tell the hon. Gentleman that there is not the slightest prospect of a Labour Government in the future adopting the policies proposed by the Conservative party. We believe that a deficit reduction over a period will give this nation state a financial soft landing. What the Conservatives promise us-they do not offer it-is a hard landing for the economy and for those in work.
	Conservative Members can take their campaign to the country. We too will take it to the country. The Conservatives will send to the country-those who are in the Chamber are nodding-an emergency Budget and emergency cuts, and we shall see unemployment rise. I shall come later to the point made by my right hon. Friend the Member for West Dunbartonshire (John McFall), but that is what is being offered in this Budget debate.

Greg Mulholland: I do not think I am the only Member present who is a little confused by the hon. Gentleman's argument. Surely the point is that we need honesty in this election as never before. All the parties must say how they will reduce the deficit. The Liberal Democrats have clearly set out their plan for the next five years, and we must be honest about the fact that it will involve cuts. The question is where the cuts will be made, not if or when they will come.

Stuart Bell: I will follow the argument of the right hon. Member for Hitchin and Harpenden. The economy requires growth, it requires reductions in public expenditure, and it may require taxes. It is a question of balance. It is not a question of an emergency Budget which says, "We're now going to cut public expenditure, and we're going to make people in the public sector unemployed. That is our recipe, and you'll take the medicine."

Michael Jack: Is the hon. Gentleman aware that the Department for Environment, Food and Rural Affairs has already taken some £320 million out of its operating budget, and is now employing some 1,500 fewer people? Yet DEFRA would claim that its outputs have been sustained. This is called "improved productivity". Does the hon. Gentleman accept that fact?

Stuart Bell: What I accept as a fact is the statement made by the Chancellor of the Exchequer that we shall be looking for efficiency savings. That is what the Chancellor said in his Budget speech, and that is what we accept.
	The right hon. Gentleman reflects Conservative party policy, and I salute him for that. Conservative party policy is to cut. It is to go back to 1979 and Lady Thatcher, who said as Prime Minister, "I will cut," and that is what she did. I shall be happy-and I am sure that the country will be happy, and that my Labour party will be happy-if we spend a great deal of time establishing what the Conservative cuts will be, and I would be grateful to Conservative Members if we could establish that. I would like to move on, Mr. Deputy Speaker, but I shall be quite happy to go on answering their questions.

Mark Hoban: I wonder whether the hon. Gentleman has read the Government's Red Book.

Stuart Bell: No.

Mark Hoban: Paragraph 2.57 states that the Government will reduce spending by £38 billion. Will all that come from efficiency savings?

Stuart Bell: If I may say so, it is a bit offensive for the hon. Gentleman, in this House of Commons, to read from a Red Book-which I assume is the Red Book containing this Budget-and expect me to have read it, given that I have been sitting here since 11 am and the document has only just been made public.
	Let us return to the point. Yes, there will be a reduction in public expenditure. The Chancellor has said it, and the Prime Minister has said it, but we have used the phrase "efficiency savings". We are not going to cut in the way that the Conservative party promises-not offers-to cut, and that is the message that we will take to the country. I will ask every public sector worker in my constituency, "Do you think your job is safe under a Conservative Government?" You will find, Mr. Deputy Speaker, a battleground there, and I will wager that you will be surprised by the result.

Stewart Hosie: I agree with the hon. Gentleman that it is unfair to expect him to have read the Red Book. He will, of course, be aware of what was said by a junior Treasury Minister-the Exchequer Secretary to the Treasury, the hon. Member for Portsmouth, North (Sarah McCarthy-Fry)-on 5 January, which is some time ago. She said:
	"The Government have made it clear that reducing spending accounts for two thirds of the action the Government are taking to reduce the deficit following the crisis-measures that will reduce the deficit by £57 billion in 2013-14."-[ Official Report, 5 January 2010; Vol. 503, c. 126.]
	Is it not time for the hon. Gentleman to come clean and concede that there will be £40 billion of cuts in a single year in 2013-14, and the Labour party is at it?

Stuart Bell: I do not think it is necessary to refer to a speech made by a junior Treasury Minister on 5 January, because the Chancellor of the Exchequer said exactly the same today. He said that in 2012-13 there would be £57 billion less in the economy than there is now. The point is-it is difficult for me to labour it sufficiently-that that position will be reached by means of a variety of measures. It could be reached through the efficiency savings that have already been mentioned, and, as the right hon. Member for Hitchin and Harpenden said, it could even be reached through taxation. What we do not promise is what the Conservatives promise: cuts which will affect public services.
	I should like now-with your leave, Mr. Deputy Speaker-to return to the subject of the Budget. At the beginning of his statement, the Chancellor of the Exchequer pointed out-this has not been quoted by the Conservatives, or, I believe, by the Liberal Democrats-that we have lived through a global recession. We have lived through a repeat of the 1930s. We did not do the same as we did in the 1930s, however. We did not let 12,000 banks go to the wall. We saved them, and put money into them. We introduced quantitative easing, which saved the banks. We did not go from a recession to a depression; we avoided that. We did not even reach the 3 million unemployment figure that was forecast-with some joy, I have to say. We have steadied the economy, as other nation states have done. Of course we need banking reform, but it must take place on an international basis. It is not possible for one country to introduce it without taking the rest of the group of 20 with it.
	Incidentally, while we are throwing figures around the Chamber, why do we not cite what the Chancellor said about the £8 billion that came back to the Bank of England? Why do we not talk about the great success of the car scrappage deal? Last year, we were arguing about it. I have a copy of the speech that I made last year, and I will say very clearly what I said last year.
	"In one car dealership in Middlesbrough alone-Jennings of Middlesbrough-there are 470 people who work there, and throughout the north-east. It invests in the latest equipment and it services and maintains our cars and vans. This helps to make our small and medium-sized enterprises viable. Anything that helps such businesses to continue, including the scrappage deal, is welcome. I predict"
	-we can be prophets with honour in our own country-
	"that while it is available, it will have the same impact as the similar schemes in France and Germany, and that the 30 per cent. loss of sales by car dealers will be rectified. We should not overlook the fact that our car dealerships play their part in the local community. They are, for example, investors in local charities. This will be a welcome proposal for them."-[ Official Report, 22 April 2009; Vol. 491, c. 290.]
	The Chancellor of the Exchequer confirmed today that car sales had increased by 30 per cent.

Barry Gardiner: Does my hon. Friend agree that it would have been better for the car scrappage scheme to focus on making the money available only to those who bought more fuel-efficient cars, rather than enabling them to trade up and buy bigger engines with greater cubic centimetre capacity which polluted more?

Stuart Bell: That concept might well have produced a better scheme, but the fact remains that the scrappage scheme saved our car dealers and our car industry. Sales increased by 30 per cent. There are all sorts of fuel efficiency measures in London. I have to congratulate the Mayor of London on his biodiesel scheme, which enables people to avoid the congestion charge. But, of course, everything can be refined and improved.
	I would have loved to spend much more time dealing with the speeches of the Leader of the Opposition and the leader of the Liberal Democrats. They both reminded me of a business man who wishes to take over a football club. He is very successful in his business. That business man goes into the football club. He leaves his acumen at the gates, and he enters a world of total unreality: everything is unreal and bizarre. The team end up being relegated, however, and that unreality is replaced by a fast-moving reality.
	The Leader of the Opposition's speech was totally nonsensical: it had no meaning, and it made no sense, because it was written before the event. It was meant to please those sat behind him, and to get a cheer and a wave, but it had no significance to the national economy. I must add that the leader of the Liberal party's speech was no better, and I draw that comparison because both of them get carried away by the media. They think that catching the headlines for the 10 o'clock or 9 o'clock news makes a policy, but that is not the case. We will make sure that we fight the coming general election on principles and policies, not personalities and press statements, and I was therefore disappointed by both party leaders' statements.
	Although my right hon. Friend the Member for West Dunbartonshire is not in his place, I want to congratulate him: he has toiled for many years in his role as Chairman of the Treasury Committee, and he has rendered contributions of great significance to our economic debates and made some very fine remarks on the subject. I suppose, however, that after nine or so years in that post it is understandable if he has become a little conventional in his thinking, and whereas he said that we have to satisfy the markets, in fact we do that quite ably. Our last Treasury bond issue was oversubscribed. The markets have full confidence in our economy, and our ratings have not been downgraded. We are not Greece. When addressing a youthful audience, the Leader of the Opposition made the following aside: "We are now on the same level as Greece." That is not the case, however. Such false arguments are made because it is easy to catch the headlines with them, but that is not a policy. The ratings agencies support our economy and the Government's measures, and they have, in fact, maintained the ratings that we as a sovereign state have had for many years.

Andrew Tyrie: Is the hon. Gentleman aware that the sum total of this year's bond issue almost exactly matches the amount that has been bought in quantitative easing by the Bank of England? Does he not therefore understand that this huge increase in the deficit has so far been absorbed, because on one day the bonds are sold in Eastcheap and on the following day they are picked up by the Bank of England in Threadneedle street?

Stuart Bell: And the economy moves ever onwards. The economy moves: people buy; people sell; people borrow. So what is the hon. Gentleman complaining about?

Andrew Tyrie: I hope that the hon. Gentleman understands that this is the world of funny money and this programme of buying back our own debt cannot last, and that although it was necessary at the time when it was initially implemented, as soon as the economy stabilises, which it is doing now, the programme will have to be stopped or even reversed and that would be hugely costly for a generation to come.

Stuart Bell: That is another wild and woolly forecast far removed from reality from the Conservative Benches. We are talking about a nation state. The Chancellor made the point that we are the fourth largest economy in the world. We are not a tin-pot economy, therefore. The hon. Gentleman talks of funny money. His party colleague, the right hon. Member for Hitchin and Harpenden, mentioned quantitative easing. They should get together and try to work out what they are talking about. With a general election coming up, it is important that the Conservatives get their act together but, unfortunately, that is not happening.
	My right hon. Friend the Member for West Dunbartonshire mentioned the private and public sectors, and he correctly said that if the policy is not right, it leads to unemployment. That was the great scourge of the '30s, and we have sought to avoid it. That is why unemployment is coming down. That is also why, unlike the French economy, we do not have a 10 per cent. unemployment rate. The French have had such a rate for years, and it has caused many severe ructions in their economy.
	My right hon. Friend also mentioned youth unemployment. We have done all we can over the years; we even introduced the national minimum wage for employed youth in order to get people into work. I am making an important point, but Conservative Members do not seem to get it. They have completely lost touch with reality, and they do not understand that destabilising the economy leads to unemployment, and that is not a price worth paying in this time.
	May I now return to the speech that I wished to make in the interests of my constituents, on the basis of what the Chancellor has said? A long time has passed since the good news was brought from Ghent to Aix, as Robert Browning said in his great poem. Browning did not say what the good news was, and I leave that to historians.

Peter Lilley: It was a new Conservative Government.

Stuart Bell: I thought it was the battle of Blenheim. Regardless of what Browning's good news was, however, there most assuredly is good news on the Teesside scene, and also the national scene and economy.
	On the national scene-I am glad the hon. Member for Dundee, East (Stewart Hosie) is in his place because as a Scottish Member of Parliament this will be of great interest to him-Total SA has announced a £2.5 billion development investment in the North sea west of the Shetlands. This will be a strategic development of two new gas fields-Laggan and Tormor-lying in 600 metres of water in the harshest environment in the United Kingdom, and the fields will be developed using the latest technology. The fields contain more than 1 trillion cubic feet of gas, plus some condensates, equating to about 230 million barrels of oil equivalent. This will create 117 jobs a year in the Shetlands over the lifetime of the project, and some 2,200 jobs in Scotland. The fields will be able to provide the nation with 20 per cent. of its gas when they come on stream, and the fields themselves represent some 17 per cent. of the nation's gas reserves. As the Prime Minister said in today's Question Time, the investment has been helped by the Chancellor's decision to provide up to £160 million-worth of tax relief for each gas field that qualifies for the support. As the Chancellor of the Exchequer has said, the Government recognise the importance of the United Kingdom oil and gas industry to our economy and the dependable foundation it provides for the nation's energy security.
	The goods news, however, has gone further than from Ghent to Aix. Yesterday, Total announced that it has passed to Corus a letter of award for the gas pipelines that will link the gas fields with the mainland. The contract will be worth nearly £200 million. It will involve building 350 km of pipelines, safeguard 250 jobs at the Corus Hartlepool mill and add a further 100 jobs for up to a year. The order was won against strong global competition, but it shall be the Corus world-class, large diameter Hartlepool pipe facility that will manufacture the pipes, thus securing jobs, and creating new ones, on Teesside. Also, £200 million of orders shall be added, and there is the £60 million Tees valley industrial programme, put together by the Government in recognition of the need to accelerate industrial transition and seize new opportunities in low-carbon and advanced manufacturing in the area.
	It is estimated that the two-year Tees valley industrial programme will create 3,000 new jobs in the short to medium term and sustain over 10,000 jobs in the long term. The Tees valley industrial programme builds on One North East's existing £130 million investment in business, support and skills in the Tees valley to run from 2009 to 2012. In the last 10 days, One North East and its partners have unveiled the first of a number of investments via the £60 million programme to support engineering apprenticeships in the Tees valley, help workers with business start-up opportunities and help businesses in the Tees valley to be more energy-efficient. These investments alone amount to about £10 million.
	The mothballing of the Teesside cast products blast furnace is a sad blow to Teesside, an industrial cradle that has seen over many years the obliteration of its shipbuilding and module yards, and the destruction of the coal industry in neighbouring Durham-and now a further diminution in steel production. However, as Corus Steel Tubes in Hartlepool testifies, the industry is not entirely extinct. The more the steel market returns, with the help of the £200 million contract from Total, the more likely it is that the blast furnace will be de-mothballed.
	I am always averse to waving documents in the Chamber, but I yield to an American habit that has developed over the years. I would like to show hon. Members a magazine- [ Interruption. ] You shake your head, Mr. Deputy Speaker, so my little moment of glory is-

Mr. Deputy Speaker: Order. I do not know about yielding to American habits in this House, but visual aids are certainly discouraged.

Stuart Bell: I am grateful to you, Mr. Deputy Speaker, although I managed to get my little flash in before you rose to your feet.
	I would like to draw the House's attention to "Vision", a supplement of the Middlesbrough  Evening Gazette, which describes
	"how Teesside's iron fist could forge a new beginning."
	"Vision" is also published with  The Journal in Newcastle, and it gives the same message of optimism for two industrial areas that have lost nothing in their vibrancy, their determination or their work ethic, notwithstanding the global recession. Earlier I mentioned low-carbon and advanced manufacturing. Teesside fully intends to take advantage of the low-carbon sector, because the Tees valley is well placed to do so. It has its port lands, both at Teesport and Victoria harbour in Hartlepool-lands attached to the Corus plant. There are also offshore wind farms and biofuels, while in the Tees valley there are already facilities to capture carbon dioxide and store it under the North sea, with possible links to assisting the oil and gas sector.
	However, in addition to developing a low-carbon economy, the Tees valley, and Middlesbrough in particular, is leading in other sectors that will hopefully assist the long-term future of the economy, and specifically in the digital-creative sector. Middlesbrough council, in partnership with Teesside university, has developed Digital City, building on the university's burgeoning reputation in computer sciences, to retain graduates in the town and create policies and graduate businesses in the sector. In short, the mothballing of the blast furnace at Redcar might cast a deep and long shadow, but if one combines the £60 million investment programme with the original £130 million investment from One North East for 2009 to 2012, along with the £200 million pipeline contract, we can see £390 million of investment flowing into Teesside. I agree with my  Evening Gazette that Teesside's iron fist could forge a new beginning.
	Lest it be thought that the private sector was excluded-I welcome the Chancellor's statements today about small and medium-sized businesses, as well as the various measures that he is taking-I should say that local entrepreneurs have a considerable track record on Teesside, having created the Wynyard business park, which has attracted 58 new businesses and £250 million of private investment, creating 1,200 jobs in the past few years. The Secretary of State for Health recently confirmed the creation of a new £464 million state-of-the-art hospital on the site to service the communities of Stockton and Hartlepool.
	What we need, and what we are getting on Teesside, is a new start-a fresh start, for the people and for industry, for our future. It is good to go down memory lane-even I can tickle the fancy of the Conservatives by going back to 1979 and the noble Lady Thatcher cutting public expenditure-as long as one does not stay there. It is good to look at the past, with its heritage, but it is more important to look to the future, with its hope, and to do so with a determination and focus built on skills, a work ethic and fraternity within society. We have seen many things on Teesside, but it builds itself again and renews itself again, and it will continue to do so. It is incumbent on us all in the area to show leadership, work together, unite among ourselves and unite our community so that all will gain individually, and society will also gain.
	Let me end on the Budget, which is most important to Teesside and the people who live and work there. It is, of course, the final Budget of this Government-there will be a general election before another Budget-but it is also a parameter-setting Budget. It will give the community, who study the Budget carefully, hope in their future-hope under a Labour Government. Given the response of the Conservatives, the Budget will also let the community see through the shallowness of Conservative policy and, on many occasions, the idiocy of Conservative policies. When it comes to the vote, those on the Opposition Benches will find, probably to their dismay, that they will still be there after the next election.

John Redwood: I remind the House that I have declared in the Register of Members' Financial Interests that I provide business advice to an industrial group and an investment management company.
	This was the go nowhere Budget-it was almost the do nothing Budget. It was also the dither and fiddle Budget. I sometimes think that Ministers have still not understood how big an economy they are seeking to influence and how much money and resources they command, now that about half the entire national income goes through the public accounts under their mismanagement. It is, for their information, a £1.4 trillion economy. This Budget provides, on their scoring, a stimulus of £1.4 billion for the first year and a small reduction in the amount of resource available from the public sector in the following two years. Even at the peak of the Chancellor's proposed intervention this year, therefore, he is playing with 0.1 per cent. of the national income, so we can immediately see that this Budget is not serious. It is not trying to change anything real in this nearly moribund economy, nor is it trying to do anything big to stimulate growth or recovery.

Stewart Hosie: Have the Government's horizons not shrunk even further, if one considers that the total managed expenditure for 2010-11 is £2.7 billion off what they forecast even in the pre-Budget report late last year?

John Redwood: The hon. Gentleman is quite right.
	I also agree with the hon. Member for Middlesbrough (Sir Stuart Bell) when he rather kindly said that he saw the Leader of the Opposition as a new manager coming in to take over an ailing football club. He was absolutely right that the UK Government football club, under its current management, has slipped down several divisions and is facing further relegation. He is absolutely right that there are no star players who can win matches. He is also absolutely right that the wage bill is bloated and gross, and that the club is facing bankruptcy. Indeed, the club has all the conditions, which the hon. Gentleman perhaps did not have in mind, for better and new management.

Stuart Bell: And what will the right hon. Gentleman say when the club is relegated?

John Redwood: What we need is new management to stop further relegation. The hon. Gentleman should understand how far this country has already been relegated, as my right hon. Friend the Leader of the Opposition said in his passionate and eloquent speech today, when he pointed out that a country that was fourth in the world for competitiveness-which means more jobs, more exports and more ability to make a decent living-has managed to sink to 84th in the world under this Government, with their too many taxes and their too many regulations.
	To understand why our economy has suffered so badly and is not growing rapidly, we have to understand the nature of the national and public finances created by the disastrous mismanagement of this Government. It is now easiest to understand the national finances as being two rather large banks, under Government control and with substantial Government shareholdings, with a medium-sized Government attached. That is because the two banks that the Government partly or wholly nationalised are considerably bigger than the national income-or they were when they took them over-and we need to understand what is happening in those banks in order to understand the background to the Budget, what is happening in the national finances and why the recovery is so sluggish. Unbelievably, the Government proclaim that they have created sustainable and stabilised banking, in the Chancellor's words, but in fact they have done exactly the opposite, by their blundering into owning so many bank shares and their inability to manage those banks properly.
	Over the past year, to December 2009, the Royal Bank of Scotland slimmed its balance sheet by £700 billion. When it was taken over by the state, RBS started with a balance sheet of £2.2 trillion, or one and a half times the national income. However, at the end of last year that had fallen to £1.5 trillion only, just a little over the national income. When I asked the Prime Minister about that recently in Prime Minister's questions, he seemed to be completely unaware of that fact. One would have thought that it was the dominant economic fact that might concern him and his colleagues. At a time when they say they want growth and expansion, their bank-the bank they took over and they say they have stabilised-has shrunk its balance sheet by £700 billion, or by the same amount as total public spending in the year.
	Of course, the bank shrunk assets and liabilities and was reducing risk. Of course, some of that had to take place. Some of it involved withdrawing loans in overseas economies and not in the British economy, because RBS is a global bank. I put it to the Chancellor and to his representative, the Financial Secretary to the Treasury, who is left to hear the debate, that they will not have a vigorous and strong recovery if the biggest bank in the country, under regulatory and ministerial instructions, is all the time slimming its balance sheet that rapidly. Although a lot of that slimming took place through instruments other than loans and although some of it was not in the UK, all of it is withdrawing liquidity, risk management and financial instruments primarily from the business sector, which is bound to have an impact.
	To reinforce that process, Lloyds bank was doing something similar on a more modest scale. Lloyds was a £1.1 trillion bank and by the end of last year it had fallen to a £1 trillion bank-it had taken £100 billion out. Between the two banks that the Government owned, £800 billion was withdrawn. We know from the corporate plan and from the remarks of the chief executive of RBS-approved by the Government, who are the principal owners-that another £300 billion will be taken out of the balance sheet of RBS over the current year. Again, I put it to the Government that if that is the plan, although it might make business sense-I presume that the aim is to turn the thing round into a profit-making bank by getting rid of risk-it is not good news for the British corporate sector trying to use RBS as well as Lloyds. It will make it almost impossible to meet these ministerial exhortations and targets to increase lending.
	The Lloyds reduction of £100 billion was more damaging in a way, because Lloyds does rather more lending and has rather more assets in the UK relative to the size of its balance sheets, and £50 billion of the £100 billion Lloyds slimming was a reduction in loans. It does not tell us in the figures that I saw how many of those were outside the UK, but clearly quite a bit of it was UK lending. At the very time when the Government told us they had nationalised the bank to stabilise it and to allow it to lend money, it was doing the opposite and going through a severe restructuring that entailed lending less.
	That is the fundamental reason why this economy is not going anywhere: the banks have been broken and they are being nursed back to health in a way that contracts rather than expands activity. I do not know why the Government cannot see that, although I can understand why they never want to talk about it. They pretend that they are not responsible for this £2.5 trillion of assets at risk and that it is somehow nothing to do with them, yet come the Budget they say, "We stabilised the banks. Job done-no problem. All is well."

Mark Todd: I am intrigued by the right hon. Gentleman's analysis. I share some of his thoughts, but by extension I assume that he is suggesting that we should have a much more directive role in running RBS and Lloyds, and should perhaps seek to foster an underpricing of credit to the business sector. Is that what he is really thinking?

John Redwood: I would be very happy to make a positive recommendation because I would like my country to recover quicker and for there to be more jobs and prosperity. I suggest that instead of mouthing the words "countercyclical regulation" but doing the opposite, the Government should try some countercyclical regulation. I and a few others were telling them in 2006-07 that everything was overheating and that they should have tightened the regulation of the banks. They did not; they made a big mistake. What we are now saying-those of us who have got the cycle right-is the opposite. They are now tightening too much at the bottom of the cycle. We must be somewhere near the bottom of the cycle-I hope that we are through the bottom of the cycle and have just begun to turn up. This is the point at which they should be relaxing the regulatory controls on cash and capital, particularly for the two nationalised banks, which nobody is going to worry about because they know they will just print whatever it takes to meet the obligations of those banks.
	The regulator should be told to think countercyclically. The cash and capital controls should be relaxed at this stage of the cycle and tightened in a couple of years' time when the recovery is under way.

Mark Todd: Perhaps the right hon. Gentleman could develop this point a little further and set out his view of our obligations to the shareholders who are not the taxpayer in the two institutions he is suggesting a direction for.

John Redwood: I think our prime requirement in this House is to look after the interests of the taxpayers who have funded these banks and who are principal shareholders in them. Of course, in company law there are responsibilities to minority shareholders not to oppress them. What I have suggested is to change regulation of all banks so that it does not favour or target nationalised banks in particular. That would help the banks and would be in the interests of the minority shareholders, as well as the majority shareholders, because it would be permissive and would allow the banks to have bigger balance sheets for a bit, which would allow them to make more money. This contractionary impact on the balance sheet must be bad news for the shareholders. Of course, the banks need to be more prudent than they were in 2007-08, when the Government helped force them into difficulties, but making them super-prudent now is not serving the interests of recovery or the national economy.
	We were told by the Chancellor in the Budget statement that we were not going to be losing any money on these banks and that they had been a very wise investment. That is not what the Red Book says. It points out, quite accurately, that there have been £60 billion of losses so far and that when it was written-presumably very recently-we were sitting on a £12 billion loss on the shares in RBS and Lloyds. That is double the loss on the early gold sales and confirms the Prime Minister's record as a rather bad investment manager, because he seems to sell at the wrong price and to buy at the wrong price.
	Let us hope that we can work our way out of it, but there is no immediate sign of the Lloyds and RBS share prices getting to the point where they are not only above the taxpayers' purchase price, but sufficiently above it and sufficiently robust to accept dumping all those shares back on to the market to find willing buyers. If we look at these banks' profit and loss record, that is not at all surprising. Of course, since they have been under Government influence, we have had losses of £8 billion in 2008 and £2 billion in 2009 in RBS, and of £6.7 billion in 2008 and £6.3 billion in 2009 in Lloyds.
	Again, we are not told this in any public statement by Ministers; we are not even told it properly in the Red Book. When we are the majority shareholder in RBS, those RBS losses are our losses. When we are the most important minority shareholder in Lloyds, a big chunk of those losses are our losses. Ministers should do rather better than just coming to the House and saying, "We have got these lovely bank shares and we are going to sell them one day at a profit." Lots of investment managers would like to be able to claim that about their worst investments, but what we need is proper analysis of what has gone wrong with those bank shares so far, how the Government think they will start making decent returns on capital, and how that might provide a background for getting some of the taxpayer's money back.
	It was very fortunate for the Government that Lloyds decided to give an unusual interim update on its trading position very recently, before the Budget, and I believe it is giving another briefing today, at the very point at which we are debating the Budget. It would have been a courtesy to the House if Ministers had shared those very important statements with the House-both the one updating on profits, which was positive, and the one today, which I do not know about because I have been in the House listening to this debate. Given that we have such a huge financial interest on behalf of taxpayers in these banks, surely the Government should report to us in a detailed way on what is happening. It is a matter of great public interest. We are invited to debate £1.4 billion of petty cash, but we are not allowed to debate the changes worth hundreds of billions of pounds in the balance sheets of these very large banks.
	The economy is not recovering at anything like the pace that any of us would want. Most private-sector forecasts say that the recovery will be very slow and drawn out. As my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) noted, Governments of both parties trying to get out of recession have cut public spending pretty early on, and that has fuelled and helped extra growth. That is what happened in the 1970s: a Government of the Labour disposition were reluctantly forced into cuts by international bodies, and that allowed growth to take place.
	The same thing happened, winningly, in 1981 and 1992, when Conservative Governments realised that controlling the public-sector deficit was an important part of freeing resources, keeping interest rates down and creating more money in the private sector. It was literally from the day when the Government announced public expenditure controls that the economies at those dates took off. They grew far more positively on those three occasions than has been the case with the fitful recovery that started in the final quarter of last year.
	The Government need to understand that they have a very serious problem that all their remedies are making worse. Taxing more undermines confidence: taxing rich and successful people more means that they go abroad, and taxing businesses more means that they work less hard, or that they close down in this country and take their activity elsewhere.
	Ministers must know that this is happening. It is not a scare invented for the sake of the debate by someone who believes in free enterprise; it is what is actually happening in the £1.4 trillion economy that they are trying to influence. Ministers should get out more and understand what the threat to this country is.
	The Government have racked up these enormous debts, and we have got into the incredible position where £1 of every £4 spent in the public sector is now borrowed, or borrowed and printed. As my hon. Friend the Member for Chichester (Mr. Tyrie) remarked, the printing has to stop some time. It may have stopped already; the Bank of England has certainly put it on pause.
	When the markets believe that there will be no more printing, reality will come home and the impact will be very negative. The Government intend to borrow £150 billion or £200 billion, but the Red Book shows that this year's gross gilt issue amounted to £227 billion. That is because the Government have to refinance expiring debt as well as finance the extra debt being built up. When the markets realise that the Bank of England is no longer around to buy £200 billion or £227 billion of debt to help things on their way, people will want a lower price at a higher interest rate for lending money to the British Government.
	That is why we are so worried. If we allow that process to happen-as Greece, Ireland and Iceland did-the interest burden can spin out of control very quickly and become extremely expensive. The Red Book shows that interest on debt, at £43 billion in the current year, is already a more expensive programme than the defence budget, which is put at £40 billion. However, the cost of the debt interest will shoot way above that-first, because the debt is increasing too rapidly, and every extra bit of debt comes with an interest burden; and secondly, because the interest rate will rise if the Government do not do anything.
	The hon. Member for Middlesbrough rightly said that we have not yet been through the embarrassment of a credit rating downgrade, and I hope that we do not go through that. Credit rating agencies know how difficult politics is, from their experiences through the crisis, and it would be very surprising if they decided to downgrade an important sovereign nation like Britain just ahead of a general election. That would clearly be a very political statement, and seen as such. However, the hon. Gentleman should not be too calm in thinking that everything is well, as the markets are downgrading British sovereign debt all the time. He must understand that we are paying 1 per cent., or 100 basis points, more than Germany to borrow money for the same length of time.
	Why are we having to pay 1 per cent. more, and is it important? Yes, of course it is important, because 1 per cent. extra on 3 per cent. is a 33 per cent. extra charge on the cost of borrowing money. When one wants to borrow £150 billion-or £200 billion, £500 billion or £700 billion; whatever the total will be when it is all added up-the sums involved are absolutely colossal. In four years time, the defence budget will not be the one main budget smaller than the interest burden: much bigger budgets than that will be smaller than the interest burden, because compound arithmetic will catch up.
	All previous recessions have ended when Governments have got a grip on the public finances. The Labour party is of course right to say that no one comes into politics to sack teachers and nurses and make hospitals worse. None of us on this side of the House has ever wanted that, and it is quite unfair to suggest that we do. However, the state employs 6 million people, and front-line teachers, nurses and doctors are only a very small minority. That means that we have to look at the whole panoply of the state's administration and bureaucracy, and that we have to discover ways to do more for less, as we are running out of money.

Stuart Bell: I am listening to the right hon. Gentleman with great interest. He speaks with great fluency and knowledge, but when he talks about nurses, doctors and all those in the public-sector professions, he reminds me of the words of Oliver Cromwell when looking at the corpse of King Charles I. Cromwell said that what had happened had been a "cruel necessity": is that what the Conservatives are offering public-sector workers?

John Redwood: I do wish the hon. Gentleman would try to follow the debate a little-he can do better than that. I had just made it clear that Conservative Members, like Labour Members, are proud of local hospitals and schools: they wish for them to be properly financed and do not wish to see a single nurse, teacher or doctor sacked for reasons of economy. That has always been true, and we never sacked teachers, nurses or doctors, whatever the hon. Gentleman may think.

Graham Stuart: My right hon. Friend is coming to the nub of the point on the debt. Our point about the debt is not just about fiscal or other balances, but the fact that if the finances of this country are undermined, future public services and the jobs of teachers, nurses and doctors are put at risk. It is precisely to ensure that we can deliver sustainable public services, particularly for an ageing population, that Conservatives are so obsessed with ensuring that we behave responsibly on finances. This is not because of our fascination with finance, but because of our commitment to public services. We know that irresponsibility such as the Government's leads to the very cuts that the hon. Member for Middlesbrough and we do not wish to see.

John Redwood: I agree: a stitch in time saves nine. The policy of the hon. Member for Middlesbrough would take us in the direction that Greece followed. Instead of immediately making sensible adjustments to public spending that did not damage front-line services, that country ended up in a panic and a crisis. In the full glare of a market collapse, it had to put through hasty and perhaps ill-judged public spending reductions, probably on a bigger scale, because it was not prepared to take sensible action in advance.
	The hon. Gentleman and the Government now believe that there are efficiency savings to be had, and that they can do more for less. I am glad that we have got to that point. For many years under this Government, the House was told that there were no efficiency gains to be had and that they were all will-o'-the-wisp proposals dreamt up by Conservatives; but now-at last-that is common ground. The good news is that incoming Ministers will find, in business terminology, lots of low-hanging fruit. There are many easy things to do to get more for less, because the public sector has not been through the kind of procedures and tests that the manufacturing sector in particular has been through in the past decade. Every year, manufacturing companies have to ask, "How can I get prices down and quality up? How can I serve my customers better and charge them less?" That is not impossible, but one must ask those questions to survive and have a successful and flourishing business in such a competitive business world.
	It is now common ground that such things are achievable, but the public will judge who has their hearts in it more to deliver, and who is more likely to have the skills to do so. Not unreasonably, the public will ask, "Why have the Government been in office for 13 years and scattered all this money, often very wastefully, and not thought until now about treating efficiency and improvement seriously?"

Lynne Jones: If there are so many easy ways in which to save money, would the right hon. Gentleman like to tell us a few that he has in mind? Will the Conservatives be spelling out all the cuts that they intend to make, and if so, when?

John Redwood: There are so many of them to suggest, but I do not want to take up the whole afternoon. I would certainly start with identity cards and regional government, and the panoply of controls and restrictions placed on local councils, which create a bureaucracy in Whitehall and in each council. Many of the strategies, partnerships and those kinds of things are all bureaucracy and words. The Conservatives want to spend that money on the teachers in the schools and the nurses in the hospitals; we do not need such a vast army of people to deal with regional government and with instructions, monitoring and audit from one level of government to another. If the hon. Lady wishes to see more detail, she can find it in the economic policy review that I published for the Conservative party some time ago. She will find pages and pages of quangos to cull or slim, and areas of Government work that we do not need to do.
	Things have simply got out of control. The Government have put 1 million extra public employees on the payroll, most of whom are not front-line workers. We welcome the ones who mean we get better schools and hospitals, but most are not in that category, and we need to look again at that. What do the Government need to do? If they were serious about value for money, they would have a comprehensive freeze on new recruits today, instead of advertising all those non-jobs in  The Guardian every week. If they were serious about controlling public spending, they would understand that they have done the job of catch-up on public sector wages-indeed, those wages, on average, far surpass private sector wages-and so would impose the pay freeze today. Surely it is better to share the work around than to get into a position later where one has to sack people because one cannot afford the wage bill. If one takes on a football club where the wages are too high, it is better to keep some of the players on while one is looking around, but to pay them realistically because that wage bill is the reason why the thing is nearly bankrupt.
	I fear that this is not a Budget that will be taken seriously. Most people who are looking at it know that it is a nowhere Budget from a dying Government, and they know that it contains no serious measures that are up to the task of pulling round this extremely damaged economy. More importantly, this Budget contains no measures to tackle the problem of damaged and difficult banks. If the Government really wanted an economic recovery, they would understand that the current imbalance between the public and private sectors-between the finance supplied to the public sector and the lack of finance supplied to the private sector-is their main problem. If they were serious about recovery, they would issue new instructions to the banks that they own. If they were serious about recovery, they would change the instructions through the banking regulator, because that is the main reason why we have gone from boom to bust.
	This Government's epitaph will be that they were the Government of boom and bust. Their boom was created by incompetent banking regulation and their bust was created by even more incompetent banking regulation. They like to say that it is people like me favouring a more deregulated world in the 1980s that has caused their problems, but they should grow up and own up. They changed the entire financial regulation system in 1997 when they came into office. They heaped far more regulatory detail on to the banks and other financial companies over their 13 years in office. The problem was that it was all bureaucracy, bumf and box-ticking, and they missed exercising control of the main thing, which Conservative Governments had always controlled extremely well; we never had banks blowing up and going bust on our watch, because we had one very important set of strong regulations that controlled the banks' cash and capital at prudent levels.
	The Government thought that they knew best with their regulators. They allowed them to expand the bank balance sheets massively in a way that some of us warned against and which was clearly imprudent. Unbelievably, having done that, the Government did exactly the opposite at the wrong point. They brought on the banking collapse and they brought on the recession because they switched from allowing the banks to have far too little cash and capital to demanding that the banks had far too much cash and capital for the circumstances of the time. Even worse-this is the biggest sin of all for a regulator in such a sensitive area-was that all this was done through the media, in public, so that the banks had no opportunity to sort themselves out over any reasonable time period because they were under the pressure that comes from the Government of the day telling the media and the public that the banks were nearly bust. There could not be a more perfect way of creating a violent cycle than that. We are now into punk-monetarism, money printing and an attempt to keep the public sector afloat with cheap money by creating it for the public sector's own uses. The other side of that coin has to be, I suppose, starving the private sector of money because that is not where the Government see their political interests lying.
	If the public want to know why we have an extremely feeble recovery and a lot of worry about our economy, I can tell them that it is because the Government have completely mismanaged the banking cycle. If the public want to know the really big numbers that have mattered over the past year, they should look at what the Government have been doing to RBS and Lloyds-the Government's policies have been very contractionary. If the public want to know what we need for recovery, I can tell them-they will understand this-that it is sorting out the public sector to give us value while protecting what matters and it is providing more incentive to the private sector through less tax and less regulation, so that we can attract and retain businesses in this country in order to grow again.
	We have got to earn our way out of this mess. We have got to work our way out of this mess. This Budget does not do enough for people of enterprise and people in business. It will fall to the lot of a Conservative Government to understand that, after this big a mess. a lot of stimulus and incentive will need to go into the private sector, because the private sector needs to earn a lot more to pay this Government's bills.

Colin Burgon: May I preface my remarks by paying tribute to my right hon. Friend the Member for West Dunbartonshire (John McFall) and echoing his comments about the staff? Like him, I am standing down at the next election, and I should like to thank all the staff of the House of Commons, especially the ladies in the Tea Room. I hope that that will get me a few more chips the next time I go in.
	I shall attempt to put the Budget into a wider political and economic context. The Chancellor made the point that we are not alone in our situation. The world is suffering the deepest recession since 1929-31, and tens of millions of lives are being affected all around the world. No country is immune to the shock waves that the capitalist system has generated. It is important to get our heads around the figures. In the UK, we have witnessed six quarters of economic decline, which is the longest period since records began, and the economy has contracted by more than 6 per cent. About 800,000 people are unemployed and-this is an important point-many more are being forced to take on part-time work or to take lower pay while working longer hours. At the end of last year, we saw what many hope will be the beginning of a recovery, with growth of 0.3 per cent. in the last quarter. That was a small step forward, but a step forward nevertheless. The Budget is important because the economic policies flagged up today and in the coming weeks could determine the scale and pace of the economic recovery-or, indeed, if there is to be a substantial recovery at all.
	There are some key questions swimming around in the atmosphere. Will we now return to the path of sustained growth and see the past 18 months or so as just a blip-that is the business-as-usual school of thought-or will we enter a long period of anaemic growth, taking years to recover to pre-crisis levels of national income? That is roughly where the Japanese economy is. Worse still, could we face a double-dip recession with the economy plunging back into crisis?
	The very real threat of undermining the fragile recovery that I have mentioned brings me to the policies that have been discussed in the House today. Time spent poring through the columns produced by all the talking heads who tell us about the economy shows that there are two ways of dealing with the downturn-broadly speaking, they are cuts versus investment. We have heard from the Leader of the Opposition about the need to make cuts to get the economy back on track. That, in short, is roughly where they are with their broad economic strategy. They are totally clear about the scale of cuts they want. The shadow Secretary of State for Business, Innovation and Skills has said that the Conservatives would be much tougher on public spending than "Margaret Thatcher ever was", but those policies would be devastating to the economy and to families across the country.
	In my home city of Leeds, the public sector plays a significant role. I recently worked out the figures for a debate on my great city, so I know that there are more than 110,000 jobs in public services in the Leeds region. The Conservative plans for cuts in the public sector would hit those employees and their families hard, as people would lose their jobs. That is what we have to understand. We can talk high economics here, but I am really interested in the impact that those policies would have on ordinary people. Indeed, the potential for job losses goes further. A recent study showed that 64p of every £1 that public sector workers earn is spent in the local economy, so those cuts would hit areas of the wider Leeds economy that depend on spending by public sector employees. The idea that we can separate the public from the private is ridiculous. On top of all that, there would be the cost of paying benefits to those who were unemployed as a result of the cuts. A recent study showed that those costs would be about £16,000 per redundancy, so that policy would not be not easy or pain-free. I argue, as would millions of others, that it is unfair and perverse that the price for a crisis caused by bankers and the financial system should be paid by millions of ordinary people-nurses, teachers, pensioners or whatever-through public sector slash-and-burn policies.
	Perhaps the Conservative party's desire to go down that road has something to do with the fact recently noted by my union, the GMB, that 63 of those selected by that party to stand at the forthcoming general election are drawn from the banking and finance industries. I am reminded of something said by President Roosevelt during his sixth fireside chat in 1934:
	"Those, fortunately few in number, who are frightened by boldness and cowed by the necessity for making decisions, complain that all we have done is unnecessary and subject to great risks. Now that these people are coming out of their storm cellars, they forget that there ever was a storm."
	I would add that those people have forgotten not only that there was a storm, but who actually caused it.
	I take the view, which is common outside the Chamber, that it is unfair that ordinary people should pay for a crisis that they did not create. However, as well as being morally and politically wrong, a cuts agenda advocated by any party-even my own; I have a tendency to go off message-would be economically illiterate. That is not just my argument, because calls for immediate cuts in the economy have been met with a growing chorus of criticism by some of the world's leading economists. Those esteemed people warn that the cuts policy risks sending the economy back into recession, so they have called for the very opposite and stated that the fragile nature of the economy means that it is necessary to continue the fiscal stimulus.
	A letter to the  Financial Times on 18 February that was signed by Professor Stiglitz, the former World Bank chief economist and a winner of the Nobel prize for economics, along with another 60 economists, said that those who call for immediate cuts
	"seek to frighten us with the present level of the deficit".
	The letter went on to ask what would happen
	"if implementing fierce spending cuts tips the economy back into recession".

Michael Jack: I am listening to the hon. Gentleman's argument with care, but will he help me on one point? Is it not the case that in the early days of the Prime Minister's chancellorship, the expansion of employment in the public sector happened on the back of rising tax receipts, many of which came from the expanding financial sector and because of the success of the private economy? The public sector was therefore happy to accept the fruits of growth, and the hon. Gentleman's attempts to dissociate himself from the consequences of profligacy seem to fly in the face of reality.

Colin Burgon: I am not sure that I have always bought into that analysis, but I will try to deal with the state and structure of the British economy during my speech because it is central to the debate.
	Another letter to the  Financial Times on 18 February from a further group of respected economists said:
	"History is littered with examples of premature withdrawal of the government stimulus, from the US in 1937 to Japan in 1997".
	The Conservative party tries to justify its cuts agenda by talking about fear in the financial markets about the level of national debt but, interestingly, the letter continued:
	"Britain's level of government debt is not out of control. The net debt relative to GDP is lower than the Group of Seven average, and on present government plans it will peak at 78 per cent. of annual GDP in 2014-15, and then fall. Even at its peak, the debt ratio will be lower than in the majority of peacetime years since 1815."
	As well as the views of such economists, we have real-life examples from other countries that show how the cuts policy would damage our economy, why our Government were right to stimulate the economy last year to offset some of the worst effects of the recession, and why that should continue. Ireland gives us such an example because, interestingly, it has taken the route with which the cuts club is so enamoured by cutting back to restore confidence to the markets.
	Even more interestingly, Opposition politicians have urged us to look and learn from across the Irish sea. What do we learn from the experiences of the Irish economy? As I argued in the House just before Christmas, the Fianna Fail-led Government in Ireland have been unique among the industrialised countries. In 2009, while virtually the whole world was busy implementing a variety of packages to stimulate the economy, Ireland was alone in implementing a series of deep cuts in Government spending. The lessons from that are clear: the savage cuts agenda has deepened the Irish recession, and Government finances have worsened as economic activity has slumped.
	So the first priority should be to restore robust growth, which will not be achieved by cuts. What is the way forward? The key common factor in the economies that have suffered badly in this recession is that there has been a huge collapse in investment. In the UK, the fall in investment accounts for nearly £6 out of every £10 by which the economy has shrunk. This is because investment is mainly done by the private sector, and in the recession the private sector is not investing. Business investment was 24 per cent. lower at the end of 2009 than at the start, the worst annual decline since records began in 1967.
	Without investment to generate demand and rebuild the economy, we will fall back into recession or be left with years of low growth. The way forward is clear. When the private sector will not invest, the Government must step in. We need to invest our way out of recession. For those who argue that this is not affordable, there is some good news. When the Government invest, that has a much wider impact on the economy, an impact much greater than the initial outlay. That, in economic jargon, is called the multiplier. What is more, the Government get taxes back on this wider economic growth, and the Treasury's own figures show that, if done properly, such investment pays for itself through higher tax takes.

Phil Willis: The hon. Gentleman and I were fellow teachers in Leeds, so I have much sympathy with many of the points that he makes about Leeds. Will he take into account the fact that-as documented by the Royal Society in its response to the Government's proposed cuts in investment in science, and as I am sure the right hon. Member for Wokingham (Mr. Redwood), who is no longer in his place, would agree-from 1980 onwards, wherever there is an investment by the Government, particularly in research and development, there is a correlation between that and the spend that comes from the private sector? In other words, provided the Government's investment is targeted and strategic, the private sector matches it. Is there not a danger that if we start to cut that investment, expecting the private sector to take over and accelerate, exactly the opposite will occur, resulting in a double whammy?

Colin Burgon: I share the hon. Gentleman's analysis. Indeed, we share a common analysis of the problems at Leeds United, but we had better not go there. It is interesting to see that we share that economic analysis as well.
	As Joseph Stiglitz explained last month-this picks up perfectly on the hon. Gentleman's intervention-we need
	"investments in technology, education and infrastructure . . . In short, more such spending will stimulate the economy and create jobs in the short run and promote growth and debt reduction in the long run."
	So the most prestigious economist in the world argues against cuts and advises us instead to invest in modernising the economy as the best thing that we can do for growth and to pay off the deficit.
	Making those investments would give us a chance to build a new economy, and in turn a new Britain, which the economic crisis has underlined is necessary. It would allow us to move away from the dangerous financialisation of our deeply unbalanced economy and away from the neo-liberal economics that have left such deep social scars over the past 30 years-the scars of greater inequality, a sense of vulnerability, and in the workplace a race to the bottom in terms of conditions and wages. Instead, Government investment to modernise the economy, especially in housing and transport, where investment has fallen most, and with a focus on developing a low-carbon economy and on providing the education that is needed for a high-skilled economy, would boost the economy in the short term, as well as improving long-term growth and prosperity.
	That brings me to today's proposals by the Chancellor and how we should judge the Budget. On first hearing, I would say that there has been some recognition of the need to increase investment and of the role of Government to ensure that. I did not join in the applause of many of my hon. Friends when my right hon. Friend said that we would be selling the banks back at a profit. I think that we should retain some of these banks under Government control, so that they become national investment banks.
	I especially welcome the green investment bank, and I hope that it is given sufficient funds to invest directly in creating the modern, green economy that we need. A recent report by the Green New Deal group explained how a £10 billion green investment would re-skill 1.5 million people, bringing 120,000 people back into the work force and increasing, very importantly, the earnings of those on low incomes by a total of more than £15 billion. It explains that such investment would save the Government billions of pounds in reduced benefits and increased taxes alone.
	On the wider Budget, there are some questions to consider. Is the level of investment announced in the Budget enough? Is it being implemented in the correct way? Is it going to the right sectors to create the kind of high-skilled, highly paid jobs that Britain needs? I would argue that judgments cannot be formed in the immediate aftermath of a Budget, and echo the response of the Chinese premier, Zhou Enlai, who, in the 1960s, was asked by the French ambassador what he thought was the impact of the French revolution of 1790. Zhou Enlai thought for a while and said, "It's too early to say."
	When the dust settles over the next few weeks, today's Budget will be judged on whether it will provide the Government investment needed to get the economy back on track. However, one thing is already clear. The plans of the Opposition for cuts not investment-for slash-and-burn economics-certainly offer no way forward. Like many in this House, I remember the devastation caused by such policies in the 1980s. They would hit ordinary people, hit our services, and drag the economy backwards. We must ensure that we do not return to that failed economic model. If this Budget is the beginning of a break with new Labour's love affair with neo-liberalism, I welcome it, but there is a long, hard road before us.

Michael Jack: That was an interesting trip down memory lane, organised, I think, by the hon. Member for Middlesbrough (Sir Stuart Bell). I congratulate the hon. Member for Elmet (Colin Burgon) on reliving, just for a brief moment, his party's romance with clause IV, when he said, "I'd like to keep these banks as state assets." There are many on the Labour Benches who long for that bit of yesteryear but for whom, sadly, reality has told a different story.

Mark Todd: rose-

Michael Jack: Before I get started, of course I give way to the hon. Gentleman.

Mark Todd: Did not the right hon. Gentleman find surprising the comments of the right hon. Member for Wokingham (Mr. Redwood), who appeared to share the view of my hon. Friend the Member for Elmet (Colin Burgon) that we should keep those banks for a considerable time longer, and be active in their direct management?

Michael Jack: I smile at what the hon. Gentleman has said, because I really could not see my right hon. Friend lining up with those who wish to relive clause IV. I think that he was saying that there was a time and a place for rebuilding their value, but also a time and a place for their ultimate disposal, whereas the hon. Member for Elmet may have been thinking on a more long-term basis-well, perhaps for ever-as regards retaining those assets in state ownership.
	It is obvious from the brief messages that I have managed to garner about how the Budget is seen outwith this House that bodies such as the CBI and the Institute for Fiscal Studies are raising questions over its assumptions about growth and reductions in public expenditure. The Budget may have painted part of the picture, but it is a bit like painting pictures by numbers when some of the numbers are missing. We do not know precisely what the colours will be, or what the final form of the economy will look like in years to come, because the Chancellor neatly skated over that point of detail.
	It was interesting to hear the Chancellor's analysis when he was talking about the efficiency savings that had been made and the reductions in public expenditure that would result. As soon as he got past where we are now, there was no detail about the future. It was interesting to see the rate of the pound against the euro, for example, within minutes of his sitting down; there had effectively been no change. As far as I can see, there has been no outbreak of improved confidence in the current Government's management of the economy. If we are realistic, we have to say that until we have had our general election and the mist of political battle has cleared from the field, when whoever wins can say with certainty what their policies for the future will be, the markets, which have a fundamental role to play in enabling us to fund ourselves out of recession, will still say that the jury is out, and there will still be large question marks against the value of the economy.
	Like the Financial Secretary to the Treasury, I have sat on the Government Benches through a few Budgets, and I believe that the first thing any Treasury Minister asks himself is, "How did it go down?" I thought it was interesting that there was a subdued response from the Labour Benches. Sometimes in the past that has been said to be a good sign, because when there is too much cheering the Government can find that they have bitten off too much, only to discover that like a large meal, the cheering rapidly dissipates at the end of the debate.
	However, just at the end, the Chancellor announced that he had got three effective double taxation and income tax information agreements, one of which was with Belize. There was stunning cheering, and I wonder how that is going to play on the doorstep. The elector will look at the hapless Labour canvasser and ask, "Why did you cheer so loudly about Belize, when I am worried about the factories down the road, jobs for my young people and the tax bill I am going to have to pay? Should you not have been talking about those issues, instead of cheering the fact that Belize will be able to exchange information once inquiries about individuals are put in train?" It may be of some interest, but it is an absolute irrelevance to the needs of this country's economy. Yet that was what Labour Members cheered when the Chancellor came to the conclusion of his Budget.
	There were no economic rabbits to be pulled out of the hat. In fact, I felt that the Chancellor had been involved in either some kind of fantasy economic activity, or the economics of the ostrich. Not looking to the future and telling us what was in the forthcoming attractions column was a damaging way to present a Budget.
	It was interesting that there was a lot of discussion in the Budget about help for businesses. I do not believe anybody in the House would disagree with the concept of helping small and medium-sized enterprises in particular that have suffered, especially in their ability to raise money. Yet while the Chancellor stood at the Dispatch Box with what he said was a positive message, we have learned that the budget of the Department for Business, Innovation and Skills is going to be cut by in excess of £400 million. That makes one wonder where the funding will come from for some of the schemes to help business that the Chancellor outlined. I will be interested to see that matter digested in the newspapers tomorrow, and to see whether they have found out how that trick will be pulled.
	There is sometimes a danger-I suppose that I am going to fall into this trap-that we talk about what we have heard in the Chamber and provide our own analysis without remembering that the messages about the economy affect everybody in this country. Judging by the interviews that I have seen on television and listened to on the radio, I believe that the public are further down the road than we sometimes wish to admit to ourselves. They recognise the severity of the economic situation that the country faces, and I should think every household in the country has had its own conversation around the breakfast table about what the unemployment situation in its part of the world will be and when the tax axe will fall.
	People realise that, whatever anybody says, there is a bill to be paid, and it is quite clear from what the IFS has said about the Budget that, however much we might get upset about "cuts", the economic squeeze on public spending is coming. The Chancellor has said that it is coming; there are only two things that public spending goes on-capital and people. I am afraid that, hard as it is, both will be affected by any reduction in the public sector.
	I shall pick up on the point that the hon. Member for Elmet made. Public sector employment has been growing, and recent figures confirm that it has even grown in the past few months, but if, as a result of improving the operating efficiency of the economy, the job-creating ability of the private sector improves, there will be a transfer of people into private sector jobs, which may be secure and well paid, as the economy restructures. To suggest that "squeezing", "cutting" or-whatever word one chooses to use-reducing public expenditure means that someone will be without work for ever and a day is to create a false impression. We all want a vibrant economy, but reallocating resources from public to private is a good idea, because the private sector may well create better jobs for individuals in the long term. Indeed, the economy will have to face such restructuring if we are to make progress.
	It is always correct for a Member to declare their interests at the beginning of their contribution, so I apologise to the House for the slight delay. I am a non-executive director of a retail company called Topps Tiles. We are Britain's largest seller of tiles and wood flooring.  [ Interruption. ] With declarations, people sometimes look quizzically and ask, "What is actually being declared?" However, it has been very interesting to sit on the board of a retail company and watch not only what happened during the recession, but where we are going now. I talk generally, not specifically about my company, but in the run-up to Christmas people could see that VAT would rise in January and there were some really good bargains to be had. They were going to make certain that what money they had to spend was spent as wisely as possible. So expenditure was therefore pulled forward from 2010 to 2009, and for the Chancellor to stand at the Dispatch Box and signal the increase in revenues that resulted from that pulling forward of consumer expenditure as the dawn of some great new era just flies in the face of hard reality.
	One has only to read the statement that Carpetright, which is at the front end of economic spending on the home, issued the day before yesterday to see how difficult the marketplace has become. Until the uncertainty of the general election is out of the way and more certainty is created about the future, consumers will be in very strong precautionary mode. People protect their summer holidays and Christmas, and they will think very hard indeed about spending. If consumption is level-pegging throughout the year, as I believe it will be, consumption-led growth will be difficult to achieve.
	That is why I query the Chancellor's growth figures-justified, he said, by the Bank of England. He is right to revise down his growth forecasts for the next financial year, but he says that, effectively, the economy could grow at 1 per cent. above trend. Consumption, however, is under considerable pressure; investment in the private sector, as the hon. Member for Elmet pointed out, has been under enormous pressure-and as the Opposition have said so many times, there have been difficulties with raising capital from the banks for that investment. That problem has still not gone away, so it is not immediately evident to me where that growth will come from.

Andrew Tyrie: Has my right hon. Friend noticed that according to page 173 of the Red Book, although the Government are forecasting growth of 3 to 3.5 per cent., the average figure used by independent forecasters for the same period is 2.1 per cent?

Michael Jack: I am grateful to my hon. Friend for that comment, because it raises a wider issue about economic management. I know, having served in the Treasury, that the whole of the Government's economic forecast is, effectively, based on their own estimates. They convince themselves that the numbers they want to work with are correct, they look around for some justification, and then, when they have a growth figure, everything else falls into place from that.
	I must let out a secret: I remember sitting in the Treasury during my last Budget there, when we were down to arguing about the last quarter point on growth. Given the political consequences of not having it-the lower revenues and the knock-on effect on public expenditure-a quarter point between friends is not that much. We could add a little bit on and tweak the numbers. Obviously, however, a quarter point on growth either way can have a significant effect on the level of public expenditure, tax revenues and so on that come out at the other end of the pipeline.
	We have to stop this illusion that there is a source of economic knowledge that is absolutely correct. It is forecasting, and forecasting is exactly what it says: people try to use the best data to say what they think will happen, respecting the fact that they will probably get some of it wrong. My hon. Friend the Member for Chichester (Mr. Tyrie) pointed out that there is about a 1 percentage point difference between the sum total of what the best of the private sector economists are saying and what the best of the public sector economists are saying. Given that we have handed over monetary policy to the Bank of England, a strong case can be made for saying that before the Chancellor goes nap on only his forecasts, there should be a mechanism to take into account what the best of the rest are saying. A 1 percentage point difference has such a profound effect on the future of the economy.
	If I could make one wish for those who follow me in Parliament, although not in the Treasury-I have had my time there-it would be that there ought to be a tacit understanding that before a growth number is seized on, we need to reconcile public and private forecasts.

Mark Todd: Presumably the right hon. Gentleman dissents from the rather angst-ridden part of the Leader of the Opposition's speech in which he drew attention to a variance between the forecasts in the Chancellor's speech and those in another document. These are forecasts containing huge ranges of assumptions and possible outcomes. If we could get them precisely right, many of us would not be sitting here; we would be earning rather more than those taxi-rank figures quoted by other Members.

Michael Jack: I am most grateful to the hon. Gentleman, because he has made my point for me, although I did not think that my right hon. Friend was angst-ridden; he was merely pointing out, in perhaps more graphic language than I used, one of the implications of growth forecasting and what it means to this afternoon's Budget debate and the forecasts that have been made: we have to be realistic.
	The hon. Member for South Derbyshire (Mr. Todd) and I do not disagree about the need to reconcile the best of the public and private forecasts-for that is what they are-and I accept that there are ranges. However, the Chancellor spoke from the Dispatch Box with absolute certainty, and that could bring dangers, because he has only to be half a percentage point out and we will have serious problems with future deficits, borrowings and tax revenues-because everything else is based on that forecast.
	The Budget was pitched in the context of the world economy, but when the Chancellor talked about international co-operation, and the work of the IMF and other bodies, sadly he did not develop the point about one of the most fundamental problems that has not helped this recession-the imbalances in the world economy. When countries such as China, India and those in the middle east with sovereign wealth funds have such profound imbalances on the positive side, there has to be somewhere that is negative. The United Kingdom and the United States are two prime examples of western economies whose deficits have fuelled those positive balances.
	There is very little that one Chancellor of the Exchequer can do to address that problem, but unless the world as a whole finds a mechanism to introduce more flexibility into the way in which the world's balances are handled, we will find ourselves collectively facing difficulties. For example, in this global world-we all use that term-unless the Chinese can find a face-saving way of effectively revaluing the renminbi, we shall encounter difficulties. Failure to achieve such flexibility will slow down the pace of global recovery.
	I think that this will be my last speech to the House of Commons-it is certainly my last speech on a Budget-and my second leaving present is to say that a priority for the next Chancellor must be to push hard to get agreement on balances in the world. In fairness to the previous Chancellor-now the Prime Minister-he demonstrated what could be done on a global basis to deal with world debt. If we can reach agreement on debt repayment in that way, we should be able to reach agreement on the balances in the world. There is only so much money in the world to go round, and one person's positive balance today will be someone else's misery tomorrow. What goes round comes round. In this global world, the sooner we realise that, the better. I hope that that issue will be addressed.
	From the point of view of first-time buyers, I welcome the Chancellor's late conversion to Conservative policy on stamp duty on properties of up to £250,000. I am also delighted that ISAs will continue to be favoured. We need to do something about savings in this country; we still have not done enough.
	The central issue of this Budget, however, is the deficit. I listened carefully to the Chancellor as he painted the picture of the four years and the almost £80 billion that he has yet to take out of the economy. Let us be under no illusion: if the Chancellor's commitment to halving the deficit by 2013-14 is to come to fruition, we must have some detail about where the £80 billion will come from. Efficiency savings are already the order of the day in Government. I gave the hon. Member for Middlesbrough the information about what was happening in DEFRA in good faith, and what is happening in DEFRA is happening in many other Departments as well. Finding efficiency savings without a dilution of public service is extremely difficult, and there is no way round the fact that, at some stage, we shall have to reduce the sum total of public expenditure.
	I believe that the Chancellor deserves a black mark for not being prepared to start a fundamental review of public expenditure. He is relying on carrying on until 2011 on the basis of efficiency, and saying that everything will somehow be all right on the night thereafter. At the next election, people on the doorstep will ask those who seek to represent the governing party what they will actually do and how they will save the money that every expert says has to be saved. There might be arguments about the amounts involved, but the fact remains that we have to reduce the level of public spending. We are no wiser about that now, at 4.14 pm, than we were when we started the day listening to the leaks on the radio about what would be in the Budget.
	I was personally pleased that the Chancellor announced that there would at least be no changes to his inheritance tax regime. The third little wish I would like to leave behind is this: a recognition that inheritance tax has become unbelievably complicated. If people have money, they can afford to spend money on finding ways round inheritance tax. Those who are not well off but live in a big house that has appreciated in capital may not be able to afford professional advice. They could face a big inheritance tax bill, while those who are clever will find all kinds of ways to circumnavigate the tax. That is why about 95 per cent. of estates do not pay inheritance tax. There is, however, a fear about it, and a desperate worry among many old people who would like to leave something to their heirs and graces. We should recognise that in humanitarian terms. I would like to see not an artificial exercise to raise or change the levels, but a clear change to the structure of the tax, so that we can have a low marginal rate but remove-apart from the personal allowance-all the ways in which exceptions can be found.
	I did an exercise in the Library a couple of years ago, and I found that we could get down to a marginal rate of about 10 per cent. or even less. That would be the right thing to do. The world has moved on. Inheritance tax came in when there were not such vast taxes on income and on consumption: it was a way of gettinghold of people's wealth when a capital transaction occurred. We have many more taxes available, and inheritance tax in its current form is one that has passed its sell-by date.
	I mentioned Government spending a few moments ago. I noted that the Chancellor's speech was long on the rhetoric of protecting manufacturing industry and industry in general. Fylde is the home of the air systems division of BAE Systems; it is the home of military aircraft production. Being a world leader in that field requires us to be at the margins of advanced technology for developing ideas in systems engineering and manufacturing.
	That leads me to my fourth request. It is recognised on both sides of the House that turning the tap on and off for defence expenditure is not exactly the best way to sustain the development of the technologies or to maintain skilled teams of engineers at the forefront of their field. That will not happen if there is a battle going on every five minutes as to whether this or that project is to be cut or funded. We have to find a way to sustain our investment in those technologies and to plan for the future.
	I would ask both Front-Bench teams to recognise the fact that, in respect of unmanned and autonomous air vehicles, this country is developing a lead in lean manufacturing low-cost systems with high operational performance. We should make certain that the investment goes into the people and the programmes that will sustain that. Without it, no golden egg will be harvested in that or any other advanced technology industries in this country.
	It is also time that we looked at the position of the UK in comparison with other countries with respect to the level of corporation tax. The Chancellor almost hinted that that was where he was going, but he drew back. It is important that we remain a tax-competitive country for those companies that wish to invest in the UK.
	To round off my remarks on the Budget, I should like to comment on one or two further matters that require attention. The Bank of England still has a fundamental role in translating into reality through its stewardship of monetary policy the now reconfirmed inflation target of 2 per cent. We are very lucky in this country to have had interest rates at 0.5 per cent., but I fear that we have still not taken out of our economy some of the structural problems that leave our productivity behind others in the world, thus leaving us vulnerable to increases in inflation as soon as the economy starts moving.
	I do not want this country to return to having to control inflation by running interest rates that are higher than those of many of our industrialised competitors. I suggest that we need to look again at the Bank of England Act 1998, and at the Bank's remit. We need to ensure that it is able to engage in rather wider economic management. We need to take careful account of some of the structural matters that affect the country's potential to hang on to a low-inflation economy, because if we return to high inflation, all our proud and fine words about good economic management will be worthless.
	I had the privilege of seeing on to the statute book the work that the Treasury has been conducting for the last decade on the tax law rewrite, and I want to record my appreciation for the Government's support for the project throughout that time. The project does a remarkable job in illustrating that, in a complex tax world, tax law can be expressed in a way that ordinary people can understand. Those who want to know about capital allowances, for example, can sit and read the Capital Allowances Act 2001 like a book, from one end to the other, and then understand capital allowances. What a transformation! I remind those who seek the nirvana of simplicity in the world of tax that we live in a very complicated tax world, and that tax law is bound to be complex. However, I urge the Treasury to maintain the lessons from the tax law rewrite exercise, and at least to make the law understandable to those who follow us.
	One of the things that mystify me about the problems that we have faced in the economy is how we got ourselves into this mess, but I have learnt from it-and I send the message on-that when the economy is growing, we should not do what the former Chancellor did and continue to increase public expenditure. That is not the right way in which to run an economy. A Chancellor should build in headroom, because, as sure as eggs is eggs, economic cycles will deliver downturns in the future. The idea that it is possible to get rid of boom and bust is bananas. It is silly. The world runs on cycles, and every so often those cycles deliver unpalatable news. The present cycle has been accelerated by bad decision making in bank boardrooms, with the result that we are all now picking up the tab for a limited number of people's bad decision making.

Michael Fabricant: Does my right hon. Friend agree that it always seemed very strange when the previous Chancellor of the Exchequer, the present Prime Minister, talked of balancing the books in the course of a cycle-thus recognising that there was indeed a cycle-while, often in the same sentence, saying that he had done away with boom and bust?

Michael Jack: I pay tribute to my hon. Friend, who is my former Parliamentary Private Secretary and oft-time adviser on what I should and should not do. He has made a sage point, as he so often does. When a Chancellor who had made a virtue out of prudence then abandoned her with a divorce two thirds of the way through his chancellorship, I did rather feel that he was throwing away his own legacy. I believe that most people thought that he had done quite a good job at the beginning, but he threw it away with profligate expenditure, as a result of which today's economy does not have the headroom for borrowing that it should have. That was a fundamental failure.

Ian Taylor: Of course the former Chancellor, the present Prime Minister, did very well when he first took office in 1997, because he committed himself to at least the first three years of the outgoing Government's expenditure plans.

Michael Jack: My hon. Friend has made a telling point.
	The Treasury advises the Chancellor to do certain things. Perhaps, just as a direction is given to a permanent secretary if someone wants to go beyond the departmental remit, the Chancellor of the day should be required at least to put on public record why he disagrees with advice which would seem to be profound commonsense: the advice that when the economy is expanding and there is no need to increase public expenditure, we should pay down debt. We always know that the rainy day will come, and that we will need the money then.
	We will continue, in the debate on the Budget and on the doorsteps in the campaign to come, to focus on taxes. Nobody ever likes to talk about tax increases. In fact, people do not like to talk about taxes at all unless they are decreasing taxes. Unsurprisingly therefore, one thing that has been missing in this country is a fundamental debate on tax-on what we should tax, and how we should tax it. My philosophy is that we should always have a tax system that is broadly based and that works on low marginal rates, and that we should be careful about defining areas that should never be taxed. Chancellors tend to think that they can get away with increasing taxes in areas that are not politically sensitive, such as stamp duty and air passenger duty, and as a result those whipping boys of the tax system get whipped very hard, whereas other areas are left alone. This is not the time or place to have a detailed debate on tax, but a debate on tax we should surely have, because we are now in the 21st century and the world, including how we conduct our financial affairs, has changed since we last took a proper look at tax, which was back in the early 20th century with the development of income and consumption taxes. I hope that whoever sits on the Treasury Bench in the future will address such matters.
	My time is up. Some may cheer and say, "He's talked for too long," but as this is the final opportunity I shall have to address the House-certainly on a Budget, and also, I think, on any other subject-I would like to conclude, with the indulgence of Members, by saying a few final words. First, it has been a great honour and privilege to represent the many interests of my Fylde constituents in this House over the past 23 years. Also, to have sat on the Benches on both sides of the House was a remarkable privilege, and an experience that very few Members have. We probably only appreciate how special our experiences have been when we leave this place. It has also been a privilege and honour, and a pleasure, to have chaired one of the House's Select Committee for the past two Parliaments; I shall never forget that. I would also like to place on record my appreciation to everybody in the House of Commons who makes this place work, including the army of officials behind the scenes on Select Committees and in Government. None of us can exist without all that assistance.
	I thank, too, my family, and in particular my wife; I could not have done this job without her backing. Above all, I thank the many friends and colleagues that I have had on both sides of the House. If there is one thing I am going to miss, it is the camaraderie of colleagues. To those who are coming back after the election, I send my very best wishes for the future. To those, like me, who are retiring, I send my best wishes for their retirement.

Mark Todd: It is a great pleasure to follow the right hon. Member for Fylde (Mr. Jack), but let me say, kindly and self-critically, that we have an unfortunate situation this afternoon. We have both no time limits on speeches and, from observation, a large number of Members who are retiring from the House. There is therefore a significant opportunity for self-indulgence. I will attempt to restrain myself a little, however. I do not think this will be my final speech in the House. For those who can bear it, I intend to make one further contribution, so I shall not conclude today with similar valedictions to those we have just heard.
	I last spoke at length on Treasury matters when we debated the autumn statement-or perhaps it was the last Budget-but the basic messages have remained the same. This is not the occasion for a serious discussion of how our public finances are to be brought back into kilter. I have set on record my personal views. It is regrettable that we are not able to have an adult debate in front of our constituents, to inform them better on how they might make their choices. I do not think that the Government, the official Opposition or the Liberal Democrats have set out with any great clarity what lies ahead in the next five years for the electorate. That is regrettable. Constituents of mine have said, "We would like to know what each party is intending in rather greater detail than the vague brushstrokes that have been applied so far." I regret that, but I am a realist, and I understand that few will volunteer hostages to fortune in that way immediately before an election. I will therefore not devote this speech to a discussion of that issue, on which I have said my piece.
	Instead, I want to speak about a much broader issue: the methodology of the governance of our economic policy. I was prompted to reflect on that issue by an article in the weekend's newspapers, although obviously not one that a lot of other people read. It was a piece in  The Sunday Times about the donations to the Conservative party in various constituencies, including mine. I am standing down, so I have no personal interest, but I was prompted to look carefully at what had been said by Mr. James Tyler, the individual who had donated some £250,000 to a number of constituency parties in my area and in London. When I heard about his donations previously, I had wondered who he was and what his motivation might be. The article gave some insights and some steers into speeches that he had made, which left me with a little more information.
	The article also left me dusting down my knowledge of unfashionable economic theory. Why? Well, it turns out that Mr. Tyler is a new admirer of the Austrian school. I did A-level economics, and I can vaguely remember references to the Austrian school from then. Much the best known exponent of that group of beliefs was Friedrich von Hayek-I say that in a positive sense, because I am going to say some positive things first-whose name is identified with some of the valuable insights of that school. He rightly set out the necessary inefficiencies and irrationalities of a planned economy. He and others were also sceptics of the mathematical modelling of human behaviour, which has been an obsession of modern economics, and has also provided one of the bases, albeit a small one, of our current crisis. Applying confidence to complex models, with huge uncertainties and multiple assumptions, is entirely wrong. That was the point of my intervention on the right hon. Member for Fylde. Econometrics provides useful spreads of possible outcomes. As I said, I thought that the Leader of the Opposition's contribution, which highlighted a small relatively variance in possible outcomes between Bank of England and Government forecasts, indicated a certain immaturity on the subject. His speech also indicated how his view differs from mine on the value of predictions of economic activity, which are no more than that-useful indicators of possible future outcomes that may steer our policy.
	Those who have followed my contributions on the Treasury Committee will know that there have been many occasions on which I have commented on the difficulties of using short-term economic reporting of outcomes to drive future policy. The Monetary Policy Committee relies on information provided by the Office for National Statistics, but those data are regularly revised, and sometimes relatively materially. However, in a useful discussion, the Governor of the Bank of England took the same view as me: yes, there are variances, but they are not so profound as utterly to alter the truth of the economic situation that we face. Such data are useful in helping us to steer our policy making, but it is wrong to be obsessed about detail.
	The Austrian school took that message and almost banished mathematics from economic thinking, which is perhaps rather too extreme a position to take, albeit one that was welcome to me when I studied economics, because maths was not my strongpoint. Nevertheless, I have some admiration for that approach. Not all the thinking from that school attracts criticism, therefore, yet modern adherents are regarded by most people as outliers in economic thinking. Why? This question is a pointer on my slight concern about such a major donor to the Conservative party adhering to that set of beliefs. Mr. Tyler gives some clues in the speech he gave to the Adam Smith Institute in October of last year. I admire him for putting on the record what his views are-that is helpful. He sets out some of the fundamentalist thinking that has understandably relegated this school of thought to a backwater.
	Essentially, the school espouses the most severe form of monetarism. Every economic crisis, and certainly the current one, as he says, is attributed to credit growth and the solution lies in a return, essentially, to a gold standard. Interestingly, one of his key villains of recent past economic history is Alan Greenspan and his response to the 1987 crash. Presumably, Nigel Lawson features in his rogues' gallery, but is not mentioned in his speech.
	Alan Greenspan has a long history. In an earlier stage of his career, he was a strong advocate of using gold as an anchor to currency in circulation. Let me quote a remark he made in 1966, to show how rapidly people change their views on economic policy:
	"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold."
	I have to say that that is from a gentleman who has been an adviser to our current Prime Minister, so it is an intriguing view of where he stood in the past. He went on:
	"Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."
	Of course, the gold standard was a strong feature of debate in the 1920s and the economic crises of that decade. The rigidity imposed made it impossible for an economy to adjust the realities of a changing competitive environment other than by sharp reductions in costs, prompting mass unemployment and deflation. The social consequences of that aspect of this school of thought are dramatic.
	The school also welcomes-as does Mr. Tyler, explicitly, in his speech-deflation. The theory is that prices fall to the point at which people are willing to make purchases. However, economists have pointed out that the real history of periods of deflation shows not merely the inevitable consequences of lost capacity, but the deferral of spending decisions that most purchasers make when prices fall, for the perfectly obvious reason that when one sees prices falling it is difficult to time the point at which one makes one's purchase, because one anticipates future price falls beyond that. The data show that that is exactly the behaviour of most people in a deflationary period.
	Milton Friedman, who is quoted as one of Mr. Tyler's former gurus, has demonstrated that the Austrian school's explanation of business cycles is false. The school rejects the main functions of central banks, and I must admit that I was intrigued by Mr. Tyler's adherence to the Conservative party, which, of course, wishes to enhance the role of our central bank in a variety of ways-certainly by reactivating it as a regulator of key parts of our financial systems. There is certainly some variance, at least in public policy terms, from one of their major donors. He rejects, in particular, the role in permitting credit to rise and would certainly dissent from the measures the Bank of England has taken in facing this crisis: both setting low interest rates and providing monetary easing, through which it has sought to staunch the shortfall of money supply caused by this recession. The school also strongly favours the small state, yet the evidence shows that countries with well developed welfare states and strong investment in education perform better than countries with low levels of outlay. In the modern world, it is hard to conceive that any competitive advantage is granted to a country that invests little in its infrastructure or its people's skills.
	Mr. Tyler ends his speech with a resounding call. He states:
	"Austrian economics predicted this crisis and has solutions. Austrian economics can prevent this from happening in the future. Find out about it and understand it."
	As I have demonstrated, I was certainly prompted to look a little harder at this perhaps neglected area of economic thinking, and it was an interesting but concerning experience-concerning, because this gentleman is a major donor to Her Majesty's Opposition, second only to Lord Ashcroft in personal contributions. As far as I know, he is a UK taxpayer, and that is excellent. It is also fair to say that the business he established flourished under a Labour Government. He was a financial trader in the early part of this decade, and presumably did very well under many of the policies that this Government have adopted. It is a puzzle to me as to how he reached the judgment he did concerning the prospects of a Conservative Government.
	In his speech, Mr. Tyler highlights some of the failures of past Conservative policy. He draws attention to the response to the 1987 crisis, for example, and he certainly damns the response to what he describes as the "ERM crisis". I would hazard a guess that he puts with that the tracking of the Deutschmark and other behaviours of the Conservative Government of the time. He does not expand on his criticism but the Leader of the Opposition was, of course, an adviser to the Chancellor during that exchange rate mechanism crisis, yet he appears to enjoy the confidence of this major donor.
	One has to presume that Mr. Tyler has not offered £250,000 in the expectation of a continued adherence to policies that he clearly disdained in the past. Presumably, he wishes to have at least a friendly ear for his thoughts. If his ideas are adopted in any substantial part by Her Majesty's Opposition, and if they are fortunate enough to be elected at the forthcoming election, we face the prospect of a sharply smaller economy and long-term mass unemployment.
	I can well understand the strengths of Mr. Tyler's economic principles. People who hold monetary as opposed to asset wealth might welcome them, as they protect and could enhance the value of savings. Everyone else, however, including those who hold wealth in companies, would face a gloomy future. One can only hope that this man is donating money in some fantastic hope, and not any great expectation, of a serious ear in Her Majesty's Opposition's leading counsel.

Ian Taylor: Because any business activity is inevitably impacted, for good or ill, by a Budget, may I begin by drawing attention to the Register of Members' Interests?
	Like several other speakers this afternoon, I am making my valedictory speech. The hon. Member for South Derbyshire (Mr. Todd) and my right hon. Friend the Member for Fylde (Mr. Jack)-and, I hope, myself-are going when our constituents are sighing woefully, as opposed to with tears of joy. In a sense, I am going when there is still some energy left in this body, after 23 years of service in this House.
	I am also leaving with some sadness, as this has been a fascinating period. When I first entered the House, I served on seven successive Finance Bills, which might be considered slightly beyond the call of duty. Because of the magnificent economic management of the Conservative Government, that did not mean seven successive years-in at least two years there were two Finance Bills.
	I look back with some degree of pride that I got a reputation for boring for Britain in favour of employee share-ownership schemes at a time when they were not fashionable. I am delighted that the current leader of the Conservative party has, in revitalising the party, revitalised that idea, particularly in the social field. I welcome that enormously. When I came up with that idea in the late 1980s, I thought its time had come, and I even wrote a pamphlet for-remarkably-the Adam Smith Institute. Given my other views, that was an offer I could not refuse. That idea is now mainstream. I was also-I think-the first person in the Conservative party to write a pamphlet on corporate social responsibility. Again, that was slightly out of time, because only now is it mainstream Conservative policy. In a sense, I am going just when the party has caught up with me. I suspect, therefore, that my party is rather pleased that I am going.
	The Budget is strange-it is a fag-end-of-a-Parliament Budget. We do not know what the election result will be, but I obviously hope that my right hon. Friend the Leader of the Opposition becomes Prime Minister. He has revitalised the Conservative party and I hope that he will revitalise the country. We might not know what will happen in the election, but we do know that the Budget does not give much guidance on what must happen the moment the election is over, when we must begin to take things seriously.
	Of course, there are some nuggets in it. I was rather delighted that there might be some relaxation regarding automatic retirement at age 65. I am retiring from the House just before I am 65, but I hope to do other things outside. I was thrilled with the potholes money-I believe it was £100 million. Surrey county council could probably make use of the whole of that fund judging by the size of the potholes in my county. I hope that the Treasury looks kindly on the much underfunded and neglected county of Surrey, part of which I have served for all those 23 years.
	Otherwise, the Budget rather misses the big challenges. One thing I did not see was any concept of our international position. We have a relatively weak currency at the moment, which is normally regarded as a good thing-people say, "Terrific. We can get manufacturing and other exports rising." However, that requires markets into which we can sell, and many other countries are undergoing great difficulties at the moment.
	I have been known, from time to time, as being rather positive about the European Union, from which I do not resile. However, I wish my friends in the German Government would wake up to the reality that they cannot continue to have the surplus they have and a stable monetary zone within the European Union. By the way, Portugal has had its fixed rating reduced today, so it is being fingered as country with a higher risk than is appropriate within the eurozone. We already know about the Greeks and I suspect that Spain is sweating on its credit rating, but the German Government must get their act together. Germany is the motor of the European Union and, regardless of whether or not we are in the euro, one of the motors of our exports, so it is vital that it understands that there is an obligation, which is ultimately in its interest. It is not just about China, as my right hon. Friend the Member for Fylde said.
	I mentioned China because its reserves, given the level of the renminbi, could be tremendously destabilising. The Americans are getting a little belligerent and asking whether they should impose import duties on Chinese goods, but they should remember that if it was not for the Chinese buying dollars, the dollar would be in a state of genuine crisis, which would have big knock-on effects on domestic interest rates. We do live in this global economy and although I certainly do not share the Prime Minister's view that he saved the world during the middle of the debt crisis, I give him credit for understanding that, regardless of the problems in UK, this was solvable only by looking around the world and trying to get agreement. That will have a considerable impact on the way in which we begin to structure the recovery.
	Inevitably, there will have to be what is called a "fiscal contraction", which can be either an increase in tax or a reduction in expenditure. We have had a sterile debate at times this afternoon. No party is advocating no cuts, because that would be unsustainable. I note two things in this regard. Page 11 of the Red Book shows that debt interest is now £43 billion a year which, as my right hon. Friend the Member for Wokingham (Mr. Redwood) said, is greater than the defence budget and twice the budget of industry, agriculture and employment. If one looks down the page at the figures on receipts, one sees that debt interest takes up the whole of the receipts from corporation tax. That is just an unsustainable situation, and it is occurring when rates of interest are artificially low. I am not saying that they should not be at their current levels, but if interest rates were to start to rise, debt interest would become dramatically higher and would begin to swamp excise duties, which raise only £46 billion. The relationship between these sums is important. A better way of trying to explain to the British people that we have a problem might be to tell them that we are fighting a war in Afghanistan-my son is a soldier, and he is now safely back from Afghanistan, having served his second tour-yet the British Government are spending less on defence than they are paying in debt interest on their borrowings. The public understand that that is unsustainable.
	We want to reduce services without affecting the front-line services and while looking after the people who work in those services, who are wonderful. Any Member of Parliament who visits their local schools and hospitals has a very high regard for the people working in the public sector. The cuts will be painful. The difference in the language used by the Government Front-Bench team and our Front-Bench team is not about whether or not we should have cuts; it is about the fact that the longer one leaves making those cuts, the more dangerous they are likely to be because the deeper they will have to be to convince the markets. The markets are important because of the debt interest that we are already paying, as I have already mentioned. I hope that during the election campaign we will be able to get away from the sterility of the argument, "You are going to cut sooner than we are going to cut" and get on to consider what sort of economy we want to have after we have cut what we will have to cut. That is what I want to focus on.
	During my many years in the House, I have taken a particular interest in higher education, science and space. I was lucky enough to be a Minister with responsibility for science and technology in the mid-1990s-that was up until the 1997 election. That was a fantastic portfolio, and being space Minister was quite interesting. Most of my colleagues rather wanted to send me to outer space, nevertheless the role was a stimulating experience. Within the context of public expenditure constraints, we must preserve expenditure as much as possible in education, science and space and, in some cases, invest, in contradistinction to the cuts that we will need to make in other sectors. We need to do that because what will really determine whether this country will be successful, whether it will punch its weight in the world, whether it will not be increasingly ignored by the G2 of America and China and whether it will have its voice heard not only within the European Union, of which I profoundly hope we are an influential member, but within the G20-it is actually the G28 because some countries want to hang on in there, despite not being part of the G20-is whether we are extremely careful not to destroy the added-value industries and skills that this country will depend upon for growth.
	Our economy is not going to grow again on the back of North sea oil. We have been lucky enough for that to happen in the past decade or two, but North sea oil is disappearing. There are some interesting opportunities for the further recovery of oil in fields that have been part-extinguished, and for deeper-sea drilling, but they will not give our economy the kind of boost that it has previously had. Indeed, it is likely that we will be importing more than 60 per cent. of our gas and oil requirements shortly-perhaps by the end of the decade-from unstable countries such as Russia.
	We will not see a recovery at the same level as before in the financial services industry. I hope that we do not destroy that industry; I do not want to get into the issue of taxes on banks, but we want the banking, financial services and insurance sectors to do well, as they are great drivers of wealth and innovation in the economy, not just for the bankers. The reality, however, is that we will have to stimulate other parts of the economy such as the service sector and the creative industries if we are to survive, to export and to generate wealth. That means doing something to ensure that we do not just cut higher education out of convenience.
	I welcome the comments in the Budget about funding for extra students in science, technology, engineering and mathematics. That is a positive move, although it is not enough. I juxtapose, as the Royal Society did in its recent report, "The Scientific Century", the fact that France has just announced an extra €35 billion in funding for research and development in science, and the fact that we are slicing £600 million from our higher education sector. Some strange concepts about this issue concern me deeply. We need to encourage universities to teach scientific subjects and we must recognise that those subjects are more expensive to teach, pro rata, than arts subjects. In turn, we need to encourage more people to take those scientific subjects, which means offering better teaching in the schools that are the feedstock of our higher education institutions.
	I also want to discuss science and engineering, which are not valued in the public debate as much as they need to be if we are to recover as a knowledge economy. The importance of applied science in particular is not fully appreciated. We have a high regard for our basic scientists and a very high regard for those who get citations published-we punch above our weight as a nation in that regard-but we are not so good at pulling across into reality the innovations that are necessary to enhance our knowledge economy. Again, I noted that there was further funding in the Budget for spin-outs from universities, but I think that we need to look at proof-of-concept-stage financing and to give more encouragement to industry and universities to work together on research projects, because not all ideas come out of universities-quite a lot of them come out industrial research establishments. We are aware of that, but we are fiddling at the edges.
	The Labour Government have rightly taken credit for increasing the amount of money that goes to the research councils; they have more than doubled it since I was the responsible Minister, when I was unable to persuade the then Chancellor of the Exchequer that he should do the same thing. I therefore give credit to Lord Sainsbury for changing attitudes to the research councils. However, it is interesting that both his retirement report, "The Race to the Top", and this month's report from the Royal Society draw attention to the fact that, in terms of expenditure as a percentage of research and development, the expenditure on public R and D is the same now as in 1997, when I left office as the Minister for Science and Technology, at about 0.7 per cent. of gross domestic product. So, despite the increase in the research councils' budgets, there has been a diminution in public investment in science across the board in other Government Departments. We need to be careful about that and to watch it.
	My view is that scientific expenditure stimulates growth in other sectors of the economy, although not always predictably. President Obama has put in place massive science and technology stimulus projects that will have a big effect progressively on the way in which the United States recovers, because it will have a lot of value-added industry and skills in universities. Some of the money going into American universities will attract talent from throughout the world, so there will be an influx of top academics and research institutes, perhaps including those from the United Kingdom. We need to be careful, so I hope not only that science expenditure will be ring-fenced, but that the importance of science will be underlined and understood in Government Departments, so that each Department's chief scientific adviser, and perhaps their engineering advisers, will ensure that every Minister understands the importance of projects that lead progressively to more scientific expenditure and the application of science in Government decision making.
	As I said, I shall make a comment about space, and I make the specific disclosure that I am a non-executive director of a company involved in satellite broadband. I welcomed this week's Government announcement on the space agency; Lord Mandelson and Lord Drayson were right to make the decision. This country needs a stronger position on space activity. It is one of the most innovative industries and contributes about £7 billion a year to the UK economy. It involves cutting-edge technology, a lot of which reads across to the non-space sector. The sector is therefore important, so I hope that my Conservative Front-Bench colleagues will not only endorse the space agency, as I think that they will, but understand that it will need Government funding along the lines that have been announced if it is to bring in the proposed industrial funding, which I know about from the industry and Government policy group report that preceded the space agency announcement.
	Let me focus on a final point that the Government need to take on board and on which I hope my party will focus more explicitly. The Budget included a mention of small and medium-sized companies tendering for Government contracts-I call that smarter procurement. It is vital that that happens, although it is not easy to achieve. The Government spend more than £160 billion on all procurement. For 30 years or more, America has put in place a set-aside of about 20 per cent. of such expenditure for small and medium-sized companies, which leads to a tremendous pull-through. The best form of capital for a smaller company is revenue, so if a company wins an order, it will be much more likely that outside investors will back it. The difficulty in this crucial area arises due to the costs of tendering. The Budget envisages such expenditure representing 15 per cent. of the total, which would mean that upwards of £20 billion a year would go into smaller companies. Obviously, that would have a tremendous impact, and it would be a much greater amount than the budget for the science research base. If we can get this right, as I hope that we will, the results could be dramatic.
	Britain deserves to be a leading-edge, innovative economy. I commend a recent report to Conservative Front Benchers by Sir James Dyson, which covers much of the same ground as, and makes similar recommendations to, a report that I gave to the shadow Cabinet in 2007. The time for such ideas has come, but I felt that the Budget was tired in the sense that it contained a lot of little initiatives, but no real vision of how we can drive this country back into a situation in which we can afford, through the growth of high-technology industries, the very services on which we know that the public depend. That is a real gap. I hope that during the election and beyond it, we will recover our self-confidence and determination not to be dependent on what goes on elsewhere in the world for our livelihood, and show the rest of the world that British industry can compete and that we can have the skills base that will enable us to hold our head up high.
	Those are my final words in the Chamber. I have enjoyed 23 years here, and it has been a privilege. The Esher constituency between 1987 and 1997, which became Esher and Walton from 1997 to the present, has been a wonderful constituency to represent. I have been greatly supported by my wife, whose father was a Member of the House from 1950 to 1961, when he went Upstairs, so we have a long association with the Commons. It has been a great honour for me to serve here.
	I hope that debates in the next Chamber flourish and that Members speak without notes, preferably, because it is a debating Chamber. It would be even more stimulating if people were to think things through and understand what they want to get across to the British nation in the Chamber, rather than waiting to put out a press release. I have enjoyed my time here, and I am very grateful to everybody in the House for allowing me to do so.

Lynne Jones: This may well be my last speech to the House, although there are a few days left of this Parliament. During my 18 years here I have spoken in a few Budget debates, and without exception the issue that I have always raised has been my concern about the lack of investment in our infrastructure in this country, including the research and development infrastructure. I echo the sentiments expressed by the hon. Member for Esher and Walton (Mr. Taylor), whom I count as an hon. Friend in the House. We served for a while on the Science and Technology Committee.
	Looking in the Red Book, I note that between the current financial year and the next, there is to be a £10 billion cut in the capital budget, followed by a further £11 billion cut the following year. I have grave doubts about whether that is the right way to go. I accept that there will be pain in the future, but cutting down on investment in assets that will be the engine of our future growth and prosperity is short-sighted. One element of our infrastructure is transport. I cannot see any figures for that, but we recently heard the welcome announcement about high speed rail. I do not know how that is to be financed, and I cannot see in the Red Book what is happening to capital investment in transport.

Rob Marris: Would my hon. Friend, like me, welcome an early and positive decision on a major expansion of the tram system in the west midlands?

Lynne Jones: Indeed. The lack of investment in our transport infrastructure puts us to shame, compared with similar economies in Europe. I have been trying to reduce my air travel and have travelled a number of times, both on holiday and on Select Committee visits, by train in France, Germany and Spain. I have also visited continental countries where public transport is superb and where there is substantial investment in cycling. I must put a marker down for that. Although the Chancellor announced today £100 million for mending potholes, which will help cyclists to some extent, and £250 million for our motorways, a very small amount of money could do marvels for our cycling infrastructure. That is all part of the investment that we need for a modern economy.
	Another aspect of investment that concerns me is housing. Of course, the announcement that first-time buyers are going to be helped on to the housing ladder is very welcome. In my view, however, we have been too reliant on owner-occupation. There is nothing in the Red Book about investment in our social housing, as regards not only new provision but investment in reducing energy use, improving energy efficiency insulation, and so on. Instead, there have been cuts in the Department for Communities and Local Government capital budget.
	In science, we have already started to see some cuts. The Government have a target of achieving expenditure of 2.5 per cent. of gross domestic product on investment in research and development. Not all of that will be public investment. Nevertheless, we are way off target. Public investment in science has grown substantially. It is one of the great success stories of this Government that they have invested in the science budget. I well remember having a conversation with the hon. Member for Esher and Walton in which he expressed regret that when he was a science Minister he was not able to announce such large increases in investment in our research councils and universities, for example.
	However, in terms of actual GDP, investment has remained reasonably static at about 1.8 per cent. That means that if we are to achieve the 2.5 per cent. target, let alone the 3 per cent. for R and D that was part of the growth and stability pact in Europe, we should be increasing our science spending year by year. As the hon. Member for Harrogate and Knaresborough (Mr. Willis) has pointed out, public sector investment in science and R and D stimulates development in the private sector. I agree with the hon. Member for Esher and Walton that the science budget should be ring-fenced. Moreover, the Government should think twice about capital expenditure. Spending for investment was part of the golden rule. The Chancellor seems to have abandoned the argument that spending for investment should be protected because in the end it more than pays for itself, and helps to bring in tax revenues. One of the major reasons for the huge deficit, apart from having to bail out the banks and the over-reliance on the financial services sector, has been the loss of tax revenues.
	I agreed with the right hon. Member for Fylde (Mr. Jack)-the Chair of the Environment, Food and Rural Affairs Committee, on which I have served for the past five years-when he said that we need more growth in jobs in the private sector; of course we do. However, I did not agree with him when he argued, in response to the speech by my hon. Friend the Member for Elmet (Colin Burgon), that those of us who see an important role for the public sector in these areas are harking back to times past, and some imaginary golden age that never existed. The fact is that we need both the public sector and the private sector. Surely now, of all times, we should recognise the important role that the state plays in stabilising our economy and in creating an environment in which the private sector can prosper.
	Although I have never advocated the nationalisation of the commanding heights of the economy and all the banks, I do not mind one or two financial institutions being owned by the public, or perhaps a return to a larger mutual sector. It is a great pity that we have lost the range of financial institutions that we used to have. I am sorry that the Chancellor did not mention the launch of a people's bank, as the press suggested he would. I welcomed the nationalisation of Northern Rock; it was the right thing to do, and was opposed by the Opposition. It should be used as way to relaunch the mutual sector in financial services, and I should like a people's bank to be developed in the Post Office.
	I certainly do not advocate the idea that all our banks and financial institutions should be nationalised, but we need a balance and a recognition of the interdependence of the state and the private sector. Ever since the Thatcherite era, there has been an idea that the market is God, that it will prevail and that it cannot be bucked. Since 1997, my party's Government have gone along with that philosophy. Indeed, the Prime Minister, in his last speech as Chancellor, at the Mansion House in 2007, talked about the success of the City of London and said that it hailed a new golden era that would be seen as even more important than the industrial revolution. Now we have learned not to put our trust in the unfettered market, and that we need a balance between the market and the state.
	We can take as an example the over-reliance on the housing market to provide housing. People have been pushed into home ownership who should not have been, and there has been an idea that housing is an investment rather than a place for people to live and build a home in. The role of social housing, particularly council housing, has been denigrated. People who rely on the council housing sector-I was brought up in a council tenancy and my mother is still a council tenant-have been regarded as somehow not aspirational enough, and as lesser beings than those who own their home.
	There is nothing great about having an irrational housing market. Again, it is our duty to have a balance and recognise that there is a role for renting, and particularly for the social rented sector. That is a far more efficient way of providing houses, because it is investment in bricks and mortar that is not subject to ever-increasing prices as properties change hands. Such housing stays in one ownership, and the only investment needed is in maintaining and improving properties. The worship of owner-occupation has been a big mistake in the past 20 or 30 years, and the loss of so much of our council housing has had terrible consequences. There has been a huge increase in waiting lists for social housing, yet there was no mention of the matter in the Budget.
	I am concerned also about the growth in inequality that has occurred since the 1980s, which has also been a consequence of the Thatcherite ideology. We have seen a huge growth in inequality; in a recent article in  The Guardian the Prime Minister could only claim that the Government had been successful in limiting its growth. We have a huge disparity, as the recent report by the National Equality Panel showed, with the richest 10 per cent. in our society being 100 times more wealthy than the poorest 10 per cent. Parliamentarians-even those of us on the basic parliamentary salary-are among that highest-earning 10 per cent., and compared with other members of our society we are by no means rich, just very comfortably off. However, we enjoy riches beyond the dreams of many of our constituents, and that is why the expenses scandal caused so much outrage.
	There is not enough in the Government's tax and spend policy to deal with that inequality. A recent publication by Richard Wilkinson and Kate Pickett-I cannot remember the title of their book-demonstrated that in societies where there are greater inequalities, all the bads of advanced societies, including higher crime rates, poorer mental health, higher child mortality rates and poorer health all round, exist in much greater abundance. That correlates with inequality in a society, and the issue is not just real incomes or wealth, but the comparison between members of that society.
	Social inequality is a predictor of many of those bads, which have been described as aspects of the "broken society", and that inequality has led to problems within our communities. The Government have done a great deal to address those problems and slow down the growth in inequality, and there has been financial help for families and children. Indeed, many children have been taken out of poverty, but the glaring inequalities in our society remain.
	The Government have moved-in a tokenistic way-to address some of those issues. I was highly delighted, for example, when they started to look at restricting pensions tax relief. It is absolutely outrageous that £18 billion-I think-is spent on tax relief for pensions savings and 30 per cent. of that goes to the wealthiest 1.5 per cent. of people. Some 75 per cent. of the population share about 25 per cent. of that largesse. The Government have just started to restrict that relief, but I have long argued, and I cannot see why they do not accept, that tax relief on pensions should be limited to the basic rate of tax. There is no evidence that that subsidy, particularly of high earners, increases their savings; it just means that savings are made in different ways.
	Several hon. Members have said that this is not the time to go into the tax system, but I want to mention it, because we do not have a fair and progressive system. Fairness was the subject of the first question at Prime Minister's questions earlier today, and the Prime Minister talked about the important policies that the Government have introduced, such as tax credits, to improve fairness.
	However, while people earning less than half the median income are paying tax, we cannot say that we have a fair tax system; while low earners are paying a higher proportion of their income in tax than high earners, we cannot say that we have a fair tax system. I support the Liberal Democrat policy of a huge increase in the threshold at which people pay tax. That obviously could benefit people higher up the tax scale, so there would need to be a smoothing process to ensure that higher earners did not benefit. However, that is the right way to go-it is a simple way of helping the poorest people.
	We also need to look at the balance in our tax system between taxation on earnings, enterprise and investment and taxation on bads and commodities such as land, with which people can hugely increase their wealth by doing nothing, often as a result of public sector investment in the infrastructure to which I referred earlier. Such investment can massively increase the value of land, and enrich the landowner, despite their making no effort, so it is time to take a proper look at a land tax.
	Interestingly, an Opposition Member recently raised that issue in an article in  The House Magazine. I can remember his name, but after 18 years in the House I still cannot remember the names of constituencies, so he has avoided the embarrassment of being named. At some time or other, however, Members on both sides of the House have raised the possibility of a land tax. A small percentage increase in land values only would be needed. The hon. Member for Twickenham (Dr. Cable) has moved slightly in that direction by advocating the mansion tax, which I also think is a good policy.
	Council tax is not progressive enough, although I disagree with the Liberal Democrats wanting to abolish it, because I think that property taxes are a good form of taxation. They are easy to collect and difficult to evade. However, the current council tax system is unfair, and that unfairness has been locked in by the failure to revalue it over the past 20 years. It should have been revalued at least every five years, but the Government have not faced up to that challenge.
	We could also look to increase taxation revenues by taxing pollution and through green taxes. A Library report produced in December stated that 7.8 per cent. of taxation could be classified as green taxation, which was the lowest level in 15 years. I am disappointed, therefore, that next year the Government are to increase national insurance but not increase taxes on property, pollution and carbon emissions, and that they are not doing more to create a fairer and more sensible tax system, in respect of what is taxed and why.
	Having said that, there will be an election on 6 May. The Government can claim a great deal of credit for having steered us through the recession and for taking the lead internationally in ensuring that the world did not fall into a deep depression. When people vote on 6 May, they will need to look at that record. I am probably more critical of the Government than most Members of this House-I am often more critical than members of the Opposition parties-but I certainly do not want to see a Conservative Government after 6 May.
	The Chancellor has shown that, although he is cautious, he is a safe pair of hands. He has spurned the idea of any kind of giveaway, and he has not played to the gallery in managing this Budget. People can respect him as a man who will continue to handle the economy effectively-even if it is not in as bold or as fair a way as I would like-and they will need to contrast that with the alternative. The Conservatives have always argued against the very measures that have seen us through this difficult time.
	The Conservatives are now calling for faster spending cuts, but we can already see a huge drop in public spending equal to 1.6 per cent. of GDP between now and the next financial year, because of the end of the fiscal stimulus. That is a huge amount for one year, and not enough has been said about that. We are the only G20 country besides Argentina to have withdrawn the fiscal stimulus so rapidly, and perhaps we need to look at that. We need to reduce our spending, but I would also like to see some of the infrastructure projects that we sorely need coming to fruition after the election. I also want to see our spending on research and development reinstated. Those decisions would not counter the recovery or our ability to reduce our structural deficit; I believe that they would assist in that aim.
	It has been a great pleasure to be a Member of this House over the past 18 years. Like other Members who are retiring, I thank my constituents for giving me the opportunity to represent them here and to experience things in which I would never have had the chance to participate had I not been a Member of Parliament. I have met people from all walks of life, both humble and highly elevated, and that has been a great honour.
	The House and parliamentarians are held in quite low esteem at the moment, to put it mildly. There is a common view out there that we are all the same, but I emphatically challenge that. We are not all the same; there are differences between the parties and within them. I hope that more people will take the opportunity to vote in this election than have done so in the recent past, and that when they come to put their cross against a name, they will not only consider which party they want to lead us into the future-or whether to vote tactically, if they want a hung Parliament-but look at the individual candidates.
	If people want to know what their MP has been up to, they can now visit an excellent website called theyworkforyou.com. I can claim some credit for setting up that website, although I am not sure whether Members will thank me for it. The people behind the website became aware of some important parliamentary questions I had asked about a man called Jose Bustani, the general secretary of an organisation for the prevention of chemical weapons, who was sacked-

Madam Deputy Speaker: Order. I hesitate to interrupt the hon. Lady, but I know that she is well aware that this afternoon's debate is about the Budget.

Lynne Jones: Thank you, Madam Deputy Speaker. I am going somewhat off the subject.

John Hemming: I have been one of the hon. Lady's constituents since 1982 when she defeated me in Kings Norton ward on Birmingham city council. Although I have never voted for her, I want to put it on record that she has been an excellent constituency Member of Parliament.

Lynne Jones: I know of at least one other parliamentary colleague who is my constituent. It is a wonderfully diverse constituency as currently composed.
	To finish my contribution, the website I mentioned is important because it allows our constituents to see what we are doing generally and what we are talking about today as we debate the Budget. It was set up because much of what we say here is not reported and is not easily accessible; on the website it is, and every constituent can see what we have been up to while we have been in Parliament and judge us on our performance. They will see that MPs are very different in what they say and what they do, as well as in how much they say and how much they do. I hope that people will take into account the quality of the individual candidate as well as the party they want to see elected.

Madam Deputy Speaker: Order. I have allowed the hon. Lady some latitude, but I know that a number of other Members are waiting to contribute to the debate. I hope that she will therefore continue, if she wishes to, and address her comments to the Budget.

Lynne Jones: Thank you, Madam Deputy Speaker. I was drawing my remarks to a close. I look forward to hearing a response from the Treasury Bench on my concerns about capital investment and inequality.

David Heath: This afternoon's debate has had a somewhat timeless quality about it-inevitably, given that respected Members of all parties are probably addressing the House for the last time. I wish them all well in their future careers or in retirement.
	The hon. Member for Birmingham, Selly Oak (Lynne Jones) said that the Chancellor of the Exchequer had not played to the Gallery today; well, she can say that again. This Budget was a disappointment, but a very predictable one. I waited throughout for the rabbit to be pulled out of the hat. Normally, there is a rabbit; I predicted that this time it would be a rather scrawny, emaciated or half-skinned rabbit, but I thought there would be one. In fact, there was none. This was a holding statement of a Budget to get to the other side of the election.
	What worries me about this Budget is that the British public expected and hoped for three things from it. The first, as touched on by other Members, is honesty about the dire position the country is in and how we are going to put it right by providing the deficit reduction that we all know has to be undertaken. It is absolute nonsense for the parties to pretend that one is committed to cuts while the other is committed to investment. We are going to have to make reductions in public expenditure; the question is how we do that without affecting front-line services or our constituents in ways that are deleterious either to the economy or to their personal prospects. If we simply deny the fact that that has to be done and that the national debt is increasing by £450 million each day, we will not ring true to our constituents. They know the problems and they know that the country has to face up to them.
	The tragedy is that we have not heard from the Government the details of what they would do if they were in government after the election. Nor have we heard from the Conservatives what they would do if they were in a position to do it after the election. We know that serious reductions in expenditure will have to be made, which will mean difficult choices, and we need to have that grown-up debate.
	The second thing I believe people wanted from the Budget was a sense of fairness-the fairness referred to by the hon. Member for Birmingham, Selly Oak. I wanted to see a move towards a fairer taxation system, but I did not see one. I find it almost impossible to believe that after 13 years of a Labour Government, we have increased the inequality to which the hon. Lady referred-that we have a system that taxes the lowest paid proportionately more than the most well-off in our society. Increasing the threshold would have been the right way of dealing with that in the short term, but we heard nothing at all. There is stasis in the allowances, which means an even more regressive taxation system next year than the one we have had this year.
	I wanted to see fairness in public-sector pay, but we heard that there was to be a flat-rate 1 per cent. cap on it. That is not fair. It is not fair to the people at the bottom of the heap, for whom 1 per cent. is a pittance, although I am sure it is very fair to the chief executives on their £200,000-a-year salaries. They will be very happy with a 1 per cent. increase, because it will buy them many more things than it will buy the home help who receives the same 1 per cent. A flat-rate cash increase across the public sector would have been much fairer than a percentage increase.
	I wanted to hear about fairness in public services, and a reduction of the inequalities in those services. I still cannot explain to my constituents why a child in a school in Somerset receives, on average, £700 a year less for his or her education than the average child in England, and thousands of pounds less than a child in a leafy London suburb. That cannot be right. It is simply unfair, and it is time that it changed.

Barry Gardiner: Will the hon. Gentleman give way?

David Heath: I will, very briefly. I do not want to speak for as long as some other Members have.

Barry Gardiner: I am grateful to the hon. Gentleman. Let me offer him an explanation. In the schools in my constituency, 130 different languages are spoken by the children. In one class in one of my schools a couple of years ago, 29 reception-class children had 21 first languages. The learning support needs of classes such as that require those children to receive more per capita than the children in the hon. Gentleman's constituency.

David Heath: I am sure that there are also middle-class, articulate children in those schools who are receiving the same premium. That is the problem. If the premium followed the individual child so that those with needs received the extra money, there would be fairness across the system, but that is not what happens at present. We currently have a crude formula that rewards some parts of the country at the expense of others.
	The issue of fairness applies to housing as well. It is simply not fair that some people can never afford to be housed in the area in which they grew up because there is no rented sector left and no affordable houses for them to buy, and they are priced out of the market. There will not be fairness in the system until we have fairness in housing.

Stewart Hosie: rose-

David Heath: I can tell that the more I speak, the more interventions I shall take and the longer other speakers will be excluded. However, I will give way briefly.

Stewart Hosie: The Chancellor has removed stamp duty from homes costing less than £250,000 for first-time buyers. Does the hon. Gentleman know of any first-time buyers in his constituency who could possibly raise the £25,000 to £50,000 deposit that a first-time buyer would need to buy a house at that price?

David Heath: That is precisely the point. In my area, although perhaps not in the hon. Gentleman's, the ratio in respect of average earnings and average house prices is the highest in the country. People are trying to buy into a market that is determined by people from other parts of the country with far more money than they have, which is simply not fair.
	The third element of the Budget that I would have liked to see is a real emphasis on reconstruction: reconstruction of industry, reconstruction of green investment-to be fair, the Chancellor did indicate that he was moving towards that, but I should like to see it actually happen-and reconstruction of the financial sector. Why are we so timid about dealing with the problems of the banks? Why are we so timid about recognising the value of the mutual sector and revitalising it? Why are we so timid about recognising that we cannot expect a retail bank and a casino bank to co-exist in the same organisation and work effectively together? It worries me that we have banks that are too big to fail. "Too big to fail" is anathema to me, because it means they are holding this country to ransom. They assume that the taxpayer will prop them up, and they will continue to assume that until they are cut down to size, which is what we need to do.
	Let us look at the Chancellor's boasts. He says that he has got more income than he expected from the tax on bankers' bonuses; he has attracted £2 billion, which is twice as much as he had thought. The reason for that is that the banks have been paying out £4 billion in bonuses because there is a 50 per cent. tax rate. What a failure of policy! A policy that was supposed to restrict the high rollers from paying out these extraordinary bonuses has actually resulted in their being doubled in order to pay the tax bill. It is not a successful strategy, therefore.
	We have seen the effect of the recession on businesses. I hope we are coming out of the recession, but I see the scars left behind: the shop closures in the high streets of the small towns and villages in my constituency. Some of those retail premises-in particular those in villages-will never reopen. The 6 per cent. shrinkage in the economy has had a dramatic effect on a lot of small businesses, and we now need the processes of local investment. Although we need the banks to be lending money, of course, we also need to find ways of localising, rather than nationalising, investment and providing opportunities. I would like there to be local stock exchanges, for instance, as they would provide investment income at a regional level. I would also like us to do something effective and long term about the business rates, which still cripple a lot of businesses.
	Turning to matters affecting individuals, I have already touched on tax allowances, but the council tax continues to increase. The hon. Member for Birmingham, Selly Oak says she is supportive of council tax, but I say that it is an unfair tax because it is not related to the ability to pay, and because it increases every year, causing real problems for people on low or fixed incomes, including pensioners. Even the way it is administered is unfair.

Lynne Jones: Will the hon. Gentleman give way?

David Heath: Not at the moment.
	On council tax, let me quickly mention a case involving a constituent of mine, as I find the way he has been treated by Mendip district council extraordinary. This chap is being pursued for a council tax debt that was occasioned not by him, but by a former flatmate whom he had no reason to suppose had not paid and to whom he was not related. They defaulted and cannot now be found, and as a consequence my constituent has an attachment of earnings against his very limited income: £3.30 a week for a chap who is on £40 a week, for a debt he did not incur and for which he should have no responsibility, from a council that can afford to waive it. That is outrageous and immoral, and I hope we can change the way such cases are handled.
	Council tax impacts on pensioners in particular, and I am worried that we still have not got the earnings link for the basic state pension. After all these years of promising, it is still something for tomorrow-although at present I do not want it to come tomorrow, because I want it to be introduced when earnings are rising significantly so that pensions also rise significantly. It is time that we restored that link, however. It is also disgraceful that the state earnings-related pension scheme-SERPS-and additional pensions have been frozen this year. We should be doing much more to provide fairness for pensioners.
	It also worries me that one of the effects of this recession is to produce a cohort of young people who leave school and university with very limited prospects of finding employment. They will be overtaken by their successors unless we are prepared to do something about that. I applaud what the Chancellor had to say about extending the guarantee scheme, but I wish he would reduce the time requirement for trying to find training and employment from six to three months, as some of us have advocated, because six months is a long time in a young person's life.
	I hear what is said about extra university places, but I look at the figures and they do not seem to add up. According to my back-of-the-envelope calculations, the figures seem to account for only about half the cost of those university places, so I do not know how they will be afforded. However, I do not honestly think that university places are necessarily where the investment should be made anyway. Further education is where we are seeing a starvation of funds and a lack of the right sort of skills training, which will be essential in producing the tradesmen and artisans of the future-the people we desperately need to run the economy.
	I want to touch on two or three issues that affect my constituency directly. The first is the hike in fuel duty. It has been staged, but it is still there. We will still have a 1p rise, then another, and then another again, with an extra 3p on fuel duty by the end of the year. For people living in rural areas-we cannot say this often enough, can we?-having personal transport, in the form or a car, is not a luxury; it is a necessity, because they cannot go to work, go to the shops or live their lives without one. I always mention the fact that my village has one bus a week. How could anyone live their life in that village if they did not have access to private transport? Yet every time the petrol bill goes up, those who rely on their cars become one penny poorer. We need to address the issue and find alternative ways of raising revenue without continually using fuel duty.

Lembit �pik: I applaud my hon. Friend for his erudite and insightful observations. Does he agree that the injustice is compounded by the fact that fuel is cheaper in cities than in rural areas? That means that the people who need private transport the most pay the most for it.

David Heath: That is absolutely the case.  [ Interruption. ] I hear the hon. Member for Wolverhampton, South-West (Rob Marris)-sotto voce and from a sedentary position-saying, Very green. However, there are green alternatives, such as a road pricing solution, which would dissuade people from using private cars where there were proper public transport alternatives, but not penalise people who rely on their cars because they have no alternative. That is the sort of scheme I would like to see.
	While I am on the subject of fuel, I have an awful lot of hauliers in my constituency whose businesses are facing straitened circumstances. They are constantly under attack, in competitive terms, from hauliers from continental Europe, who pay a great deal less for their fuel. There is an easy solution to that, one I advocate and would have liked to hear today: to restrict the amount of fuel that can be brought into this country in a lorry, which, incidentally, would also have a safety bonus. Doing that would mean that hauliers from continental Europe working in this country would have to pay our price for diesel, not a continental price. At the moment they nip over with a full tank, do their business in Britain, undercutting our hauliers, and then go back and fill up on the other side of the channel. That cannot be a proper competitive practice.

Barry Gardiner: rose-

David Heath: This will be the very last intervention.

Barry Gardiner: I only mean to assist the hon. Gentleman. Does he agree that one thing that would go a long way to resolving the situation would be for the UK to introduce a vignette for hauliers from the continent?

David Heath: There is a lot to be said for that, but we are not there yet. I am suggesting a cheap and easy solution that could be instituted immediately, and I would love to see that happen.
	My second, brief point is that I notice in the detail of the Budget papers that aggregate tax has gone up by 10p again. Aggregate tax was theoretically intended to be an environmental tax, but it has never acted as one. It has never prevented the use of primary aggregates; all it has done is increase their cost. Part of the justification was that the money would be recycled into quarrying areas such as the east Mendips, where it could mitigate some of the environmental effects of quarrying, but that money has now been taken away. Now, this money is spread out in an amorphous way across any body that thinks it might have a useful purpose for it. We are not even getting the direct benefit of the aggregates levy, and it is time the policy was revisited.
	My main bone of contention-[Hon. Members: Cider!] I make no apologies for being a clichéd Somerset Member-I am going to stand up for the cider makers and apple growers of my constituency, because if I do not, who will? To increase cider duty by 10 per cent., as has been suggested, and for the leader of the Conservative party to stand up and boast that it was his idea, which the Government had filched, are things I find very difficult to take.
	I do not know what the Chancellor of the Exchequer means by saying that there is anomaly when it comes to cider. The anomaly can be found in the fact that people have work, jobs and livelihoods in my part of the country, where this is a significant industry, and that the direct result of this change today will be to reverse the expansion of the industry over the past few years, to put people out of work, to close down cider makers and to grub up orchards. That is a disastrous consequence of an ill thought through policy.
	If the Government's intention was to deal with the sort of high-strength industrial alcohol that has barely seen an apple in its lifetime-that has only seen a little bit of concentrate-they should have done that. Let them deal with the stuff that is sold in the supermarkets too cheaply. However, what they have done instead will affect the artisan traditional cider maker. It will put them out of business. It could have been avoided if there had been a quota or a volume limit, so that the tax did not apply if production was below a certain volume. They decided not to do that; they did not listen. They do not understand that cider orchards take a long time to plant and to bring into production, and that the return and yield on the capital takes time to mature. All of that has been put at risk by what the Government have decided today.
	I have precedence on my side. In my constituency, near Curry Rivel, there is a monument called the Burton Pynsent monument. It was erected by William Pitt in thanks to Sir William Pynsent, who had given over the estate to William Pitt as a thank you for opposing cider tax back in the 18th century-

Rob Marris: Is that what you're up to?

David Heath: I am not saying that I want another monument-what I want is equity and fairness for the cider makers and apple growers in my constituency. If I succeed and they want to put up another monument in Curry Rivel, I shall be delighted.
	This is a retrogressive step that I bitterly oppose, and I know that it will be enormously resented by people in the west country. They will simply say that this is vindictive, that the Labour Government do not understand the west country and that they think, Cider? Who cares about cider? We will have a go at them. For the Government to have colluded with the leader of the Conservative party in doing this is a disgrace. I, for one, will remain a revolting peasant and stand up for the people in my constituency who will be affected by this and who will lose their jobs. I shall say no.

Barry Gardiner: It is a pleasure to follow the hon. Member for Somerton and Frome (Mr. Heath). I cannot say that I wish to see a monument erected to him as a result of his speech, but I understand that he is championing the cause of his constituents.
	The debate on the Budget is always exceedingly good on the first day, because people arrive and they have to respond to what has gone on. I have learned a great deal from many of the hon. Members who have spoken in the Chamber today. I particularly wanted to highlight the remarks made by the hon. Member for Esher and Walton (Mr. Taylor), who is retiring from this House. He spoke with his customary balance and internationalism and the House is certainly losing a considerable Member.
	I also learned a great deal from the right hon. Member for Fylde (Mr. Jack), who is also leaving the House. I thought that his remarks were particularly perceptive. I must say that for the first time ever I agreed with some of the things that the right hon. Member for Hitchin and Harpenden (Mr. Lilley) said, too. I shall try to get to that in my remarks, which I shall keep brief as I appreciate that many other Members want to speak.
	I believe that the important thing is that the Budget should be about confidence. Ultimately, there are key elements in the Budget, and key problems facing the country, that need to be tackled. I shall highlight five things, and speak to one or two in particular.
	My first two points link confidence and bond yields. The key issue that has hung over the debate right from the beginning has been the level of Government debt. There was an exchange earlier in our proceedings about Government bonds, bond yields, and the effect of Government debt on confidence and therefore on those bonds and yields. Ultimately, all that has an effect on interest rates and inflation, and subsequently on debt again. However, I believe that there is more to be said about that circle, which is very much at the heart of the balancing act that the Chancellor had to engage in this afternoon. Right at the centre of that circle is this issue of confidence.
	There are three other issues that I think are critical, and this is where I want to pick up on the remarks made by the right hon. Member for Hitchin and Harpenden. He was one the few Members to speak about productivity this afternoon, and I believe that he was absolutely right to highlight that.
	I believe that, essentially, the issue of productivity is a problem of management, in both the public and private sectors. The management culture in our country is not adequate, and it is not capable of producing the levels of productivity that we need if we are to compete with our competitor countries.
	Earlier this month, I tabled a written question to each Government Department. It asked the Secretary of State in each
	how many (a) disciplinary and (b) capability procedures have been initiated how many (a) disciplinary and (b) capability procedures have been (i) initiated and (ii) completed in his Department in each of the last five years; how much time on average was taken to complete each type of procedure in each such year; how many and what proportion of his Department's staff were subject to each type of procedure in each such year; and how many and what proportion of each type of procedure resulted in the dismissal of the member of staff.-[ Official Report, 17 March 2010; Vol. 507, c. 860W.]
	I have not yet got a full set of responses, but I do have a very thick pile of them. What is astonishing to me is that it is clear that one's chance of being deemed in need of a capability procedure is less than 1:100; in fact, the odds are less than 1:1,000 that action will be taken on such a procedure and result in a dismissal.
	I do not claim to be a great statistician, but I know that there is something called a bell curve. I also know that many Departments returned a nil figure for those subject to capability procedures. I believe that there is a profound failure of management in the public sector, the civil service and Government Departments, and that it extends to industry as well. That failure is partly responsible for the failure of productivity in industry and in Government.
	Let me say that I believe that that failure is compounded by the fact that we do something that we-and Labour Members in particular-are quite proud of. We say that in any situation where cuts are being made we should seek voluntary redundancies first, with compulsory redundancies only as a last resort. I understand why that seems like a good thing and the drive to achieve it. However, one must appreciate that it means that people who work in a Department or industry who know that they can go elsewhere and walk into a job do so. They take the redundancy package and pocket several thousands pounds, which is very nice, say, Thank you very much, and then walk into a job elsewhere. That means that the people who know that they cannot walk into a job elsewhere stay in the Department, which means that the Department becomes progressively less competent and productive.
	That problem plagues not only the public sector, to which I am referring, but industry and the private sector, but I believe that it is compounded in Government Departments by the stress that is constantly put on outputs and activity. The focus is always on saying, We've spent this much money, launched these initiatives and done these good things, and not on outcomes and achievements. They do not ask, How have we advanced our key performance indicators? How many people have not died as a result of our intervention? How many gains have we made in the areas where we need to make them? The civil service is always keen to push outputs and activity rather than be held to account in terms of outcomes and achievement. Unless we grapple with those management issues in the public sector, we will not achieve the advances in productivity that we need. Frankly, if cuts in public spending simply mean more voluntary redundancies, they may actually result in less efficient Departments that achieve less for the Government, albeit spending less at the same time.
	There is a challenge for the Government and the public sector, but those points also apply to the private sector. Unless the management bodies in this country, including the CBI and the Institute of Directors, begin to take good management seriously, and unless we rigorously enforce that throughout the public sector, we are not going to achieve the gains for the public purse that I believe we would all wish to see.
	I do not want to detain the House for long this afternoon, because other Members, some of whom will leave the House soon, want to speak. However, the third issue I wanted to raise is the green and high-tech stimulus. Although I welcome the £1 billion high-tech start-up investment fund that was set up-an excellent initiative-I want to point out our record regarding our stimulus and growth package directly to those on the Treasury Bench. According to the UN or the HSBC, between 6 and 16 per cent. of our package is green stimulus; but the same sources record South Korea's stimulus and growth package as between 69 and 80 per cent. green stimulus.
	Let us have our £1 billion growth fund and our investment in high-tech and green technologies-that absolutely represents the way and the jobs of the future-but let us not kid ourselves that we have been doing that effectively when the levels of green investment in our stimulus and growth package are so pathetic. The Treasury absolutely has to sort that out. That is important because we need young people to get training, skills and qualifications in those sectors, where the jobs of the future will be.
	That brings me to the final issue on which I want to focus-the importance of youth skills. The hon. Member for Somerton and Frome touched on this issue, and I absolutely agree with him. I welcome the extension of the youth guarantee, which is important and is one feature of the Budget that should be welcomed across the House. It is important to look at the differential support that is being given to higher and further education. The sector that is really suffering is further education, but much of the noise in the media has been captured by those very articulate chancellors and vice-chancellors of universities who are able to make a big noise. If one is honest about it, much of that has been about laying down markers for the future.
	It is absolutely essential that we reconsider the package of measures that we have to provide young people with skills and training in certain industries. It is important to create avenues through which they can take apprenticeships, be encouraged to set up starter businesses out of universities, so that growth units come out of universities, and to develop the new technologies that will create the jobs of the future and gradually bring our economy through the recession.
	In drawing my remarks to a close, let me say simply that the Government need to look much more carefully at the incentives they offer to the private sector to encourage productivity, because they have not been developed. We have heard about the roll-over of the capital allowances scheme for a further year to encourage investment in businesses-something else that should be welcomed by both sides of the House. However, I want much more innovative thinking on giving rewards through the tax structure for productivity in the private sector. We should be incentivising and rewarding companies for increasing their per capita output, for example, and it is a failure of this House and the Treasury that we have not been able to do so.

Stewart Hosie: It has been a pleasure to hear some of today's valedictory speeches. It has also been a pleasure to follow the hon. Member for Brent, North (Barry Gardiner), who mentioned the fiscal stimulus. The hon. Member for Birmingham, Selly Oak (Lynne Jones) also mentioned the fiscal stimulus. Indeed, one of the few times that she praised the Government was when she said that they had taken a lead in some of their work to tackle the difficulties of the recession, but the UK's fiscal stimulus package, which relates directly to the Budget, came after the first stimulus package in the United States. It also came after the packages introduced by the French, with their 100,000 subsidised work contracts, by the Spanish and by the Japanese, who provided $20 billion simply to help households with mortgages. That is almost as much as the total UK fiscal stimulus package. Our package even came after Germany's first $50 billion stimulus-so although I agree with many of the things that have been done, the idea that the UK took the lead is false.
	The hon. Lady was correct, however, when she quoted the International Monetary Fund later in her speech in relation to the suggestion that the UK is the only G7 economy, and one of only two in the G20, fully to withdraw its fiscal stimulus package in 2010. She was also right to be critical about investment, and this relates directly to growth. If we look at investment in productive assets for the future-in gross fixed capital formation- since the Government came to power, we find that on the OECD 12 list, the UK beat Russia for the first three years after 1997, and Turkey for the next two, but was beaten by everyone else, and has been bottom of the pile every year since then. Even on the wider G20 scoring for the last full year, the UK's investment was larger than only Argentina's and Brazil's, and of course our investment in gross fixed capital formation has been below the EU average in every year since the Government came to power.
	Today's Budget speech was a pretty miserable epitaph after 13 years, coming at a time when unemployment is higher than it was under the Tories when Labour came to power in 1997. The speech confirmed that the deficit, even at £167 billion, will still be some 12 per cent. of GDP. It confirmed a national debt of £1 trillion, and £1.1 trillion next year, and that that will rise on the Treasury calculation to just shy of 90 per cent. of GDP in a few years.
	Of course, the Budget also confirmed the cut to the Scottish budget in the coming year. The budget was forecast in the 2008 pre-Budget report at £30 billion-£3.5 billion of capital and £26.5 billion of revenue-but today's figures for 2010-11 are £3.2 billion and £26.2 billion, or a total of £29.4 billion, which represents a cut in the anticipated budget of at least £500 million.
	The Chancellor also confirmed that no matter what the Government say, their approach to tackling the problems, and especially the deficit, remains one of deep and savage cuts. It is still expected that £57 billion will be taken out of consumption-taken out of the economy-in 2013-14. That is made up of nearly £20 billion in tax rises and nearly £40 billion in cuts, and I ask the Government how they can conclude that taking the equivalent of 3 per cent. of GDP in consumption out of the economy in a single year will do anything other than tip the economy back into recession, especially when the GDP forecasts are based on growth rates of 3.25 per cent. in four of the next five years. We have already heard that that would be at least a point above trend growth, and we are coming from a difficult situation in which a great deal of capacity and output has been lost. I suspect that few believe those growth rates, but if we do not have growth of 3.25 per cent. in four of the next five years, and the Government stick to the plan in the Fiscal Responsibility Bill, the cuts will need to be even deeper. We will then run the risk that if we hit a downturn, we will not have the flexibility to use even the automatic stabilisers, let alone a fiscal stimulus, if we thought that that was required.
	The Chancellor suggested that he wanted a Budget for growth, but he instead delivered a recipe for disaster, not least because although he restructured the fuel duty increase-we are now getting three 1p increases over the next year-that will add to the three increases in December 2008, April 2009 and September 2009. Those six fuel duty increases in the space of barely two years will represent something close to a 16 per cent. rise in fuel duty, which is massively above inflation, and that will put more pressure on hauliers and families, as well as being an inflationary measure in its own right.
	I am indebted to Alliance Trust for its most recent inflation report, which tells us that real inflation for people between the ages of 50 and 64 is 4.5 per cent.-some 50 per cent. higher than the official rate. That means that with national insurance going up, which was barely mentioned today, and tax allowances frozen, which was possibly not mentioned at all today, plus the rises in fuel duty, we are seeing a very real cut in the living standards of ordinary people. The bankers still got their bonuses, and the banks, not the bankers, paid the tax-but again under this Government it is ordinary people who will pay the price.
	What the Budget failed to do, and the Chancellor ought to have done, is to recognise that recovery remains fragile and deliver a continued fiscal stimulus to ensure sustainable recovery. Instead, as I said, he confirmed, in effect, that the UK is the only G7 economy fully to withdraw its fiscal stimulus package this year. The fact that total managed expenditure is down £2.7 billion on the forecast given in the PBR late last year tells its own story.
	If we were serious about rebalancing the economy to make up for the 1 million manufacturing jobs lost before the recession and the many lost during it, we would have had far more information about the various incentives for growth. I genuinely hope that the equity and venture capital fund for growth works. I hope that RBS and Lloyds will lend money, and that that was not simply an assertion-although when we hear about the actuality that followed the rhetoric of the past year, I am not so sure.
	I hope the Government are telling the truth when they say that they will introduce a system for the video games industry similar to that used for the film industry; that is dreadfully important in Dundee. Yet the Red Book tells us that in terms of assistance for video games, there will be no cost to the Exchequer in 2010-11. That means no action in 2010-11. Another industry sector will have to wait down the line while its competitors in Canada and other countries are racing ahead with incentives and looking to take the work and the contracts away from the UK.
	I was pleased that the Chancellor spoke about the green investment bank, but if we are serious about protecting the environment and growing the economy, serious about carbon capture and storage, serious about a biomass non-nuclear base load, serious about offshore wind, wave and tidal, and serious about growing a biomass supply chain, what he could have done today, and what the Treasury should have done, is to change its rules at least to free up the £200 million of fossil fuel levy sitting in a bank account, which can be used by the Scottish Government only to pump-prime such projects, and to change the ridiculous rules that would have seen the same amount of money cut from the block, putting further pressure on other jobs and services.
	It has been said before that with household consumption down 1.9 per cent. last year, business investment down 24 per cent., and gross fixed capital formation down 14 per cent., it was only Government investment that propped the economy up. I cannot for the life of me understand why we are seeing cuts now, before we have sustained recovery. If the Government understood that, why would they have pressed on with national insurance increases that will take £10 billion in tax from employers and employees over the next three years?
	The Chancellor spoke a little about the banks and about the success of the bank bonus levy, but that tax is paid not by the bankers but by the banks. He seemed delighted to get an extra £2 billion, but that is £2 billion less to lend to real families and real businesses in the real economy. The tragedy, as I said at the beginning, is that the Budget amounts to a pretence that Labour is investing, when the plans are to cut public expenditure and investment.
	At least Lord Mandelson was right last year when he spoke about 10 years of austerity under Labour, but it is not austerity that Scotland needs and it is certainly not austerity that the UK economy needs. What Scotland and the UK need is help to get moving, but the Budget today, I fear, does not deliver. It is not a plan for economic renewal, but a political dividing line. It is designed not to deliver growth in the economy for years or decades ahead, but to hide the nature of the Labour cuts to get the Government through to the election in six weeks' time.

Andrew Tyrie: I agree with quite a bit of the analysis by the hon. Member for Dundee, East (Stewart Hosie), but not with the proposed policy response, which was, in sum, from my own English perspective, rather a good case for creating fiscal independence for the Scots. However, I will not develop that theme because I want to make some points about the Budget.
	This Budget, like all Budgets, should be about accomplishing at least three things. First, a Budget should ensure that the public finances are in reasonable shape and that overall financial policy is on a sound footing. Secondly, it should try to contribute to a credible framework for long-term growth. That requires clarity about the role and limits of government, and a consistency of approach, particularly on taxation, so that the private sector can take decisions in a relatively stable framework. Thirdly, it requires an underlying long-term strategy that the country can understand and accept. Without that public confidence in the policy, any Government action, even when it is right, is unlikely to succeed.
	I shall say a few words on each aspect, mainly the first-financial policy. More or less from the moment he arrived, this Chancellor has been forced to choose between loyalty to the Prime Minister and his party on the one hand, and the best interests of the economy and the country on the other. This Budget is the product of that conflict of loyalty-a phrase that will be familiar to a number of Conservatives in respect of the relationship between Foreign Secretaries and Prime Ministers, as well as Chancellors. The struggle between what the economy needs and what we have, as between the Chancellor's view and the demands that his Prime Minister has been making, were on display today. Everybody in the House-there are not many of us, mind you-knows that Labour's huge structural deficit has to be closed. If it is not closed, then, frankly, financial ruin awaits Britain-a Greek experience. Everybody knows that that can only be done by cutting public spending, among other things. That, in turn, requires a spending review, with announcements of where the cuts will be made and how the most vulnerable in our society will be protected from them.
	However, this Budget has persisted with the opposite strategy. The spending review remains postponed, and little extra work has been done to plug the gaping hole in the credibility gap of Labour's financial strategy. This has all happened despite the fact that, even over the past six months, the Chancellor could at least have conducted an internal review and given us some idea of where he is going, which a number of Labour Ministers privately think would have been a preferable strategy. He could have bolstered economic confidence by at least beginning the process of rebuilding the Government's shattered reputation for fiscal management. However, that would have meant going to the electorate with many unpalatable spending cuts out in the open, while confirming an unpalatable truth: that much of the spending binge that we have experienced over the past decade, which took public expenditure from 36 or 37 per cent. of GDP to 48 per cent.-a colossal rise-was a profound mistake. To spell out a reversal of policy, even one which everybody knows that the country needs, would have meant confirming that the Prime Minister's record of economic management was also a ghastly mistake.

William Cash: Will my hon. Friend give way?

Andrew Tyrie: I will just this once, although I know that another Member is waiting to speak.

William Cash: My hon. Friend has enormous experience of these economic matters, and I wonder whether he has a view about the extent of the true debt, because I have just had a letter from Sir Michael Scholar, the chairman of UK National Statistics, confirming that the ONS figure, including financial sector interventions, would be as much as £3.2 trillion.

Andrew Tyrie: I am familiar with these arguments and with the £3.2 trillion figure. I think that there is probably an understatement of the total stock of Government debt and that the true figure lies somewhere between that figure and the Government's figure. When we get into government-in a few weeks' time, I hope-the office for budget responsibility will need to establish what figure the Government should use as the basis for their economic policy and strategy, which is not necessarily the figure that a statistician would think is the right one for the purpose of Government statistics, but one that an economist would consider appropriate for setting policy.
	As I was saying a moment ago, setting out in detail what is required to deal with the fiscal mess that we are in would have also meant confirming the Prime Minister's personal responsibility for the boom and bust that we have just experienced. It was not just many of the spending increases that were wrong-headed-damaging enough though they have been, generating a deficit of about 12 per cent. of GDP-but the rhetoric that accompanied them. Millions of individuals and companies up and down the land are living right now with the consequences of having believed the Prime Minister's mantra when he was Chancellor that he had put an end to boom and bust. They went out and borrowed more than they otherwise would have done because they trusted his mantra.

Andrew Stunell: Will the hon. Gentleman give way?

Andrew Tyrie: I will not, if the hon. Gentleman will forgive me.
	The Prime Minister is not just responsible for the massive public debt; he also bears a considerable burden of responsibility for the unsustainable increase in personal and corporate debt over the past decade. He encouraged the actions of those who were misled into borrowing more than they should.
	Given all that, I can well understand why the Chancellor backed off giving us a Jenkins-style Budget. In 1970, Roy Jenkins did tell the truth and tightened policy, but he lost the election. In his case, of course, at least he was doing that at a time when he did not simultaneously have to confirm that his Prime Minister was a broken reed.
	Of course, the boom and bust rhetoric has been abandoned. So, incidentally, has the word stability. It was mentioned on average 11 times in every Budget speech that the Prime Minister made when he was Chancellor. In the past two Budget speeches-I listened carefully to this one-I did not hear the word mentioned once. Stability is out. Perhaps it was in there somewhere, but if so it passed me by.
	I have already said a few words about the Prime Minister's first two contributions to Britain's current dire economic predicament, the spending binge and the rhetoric of boom and bust. The Chancellor, who is a hapless man in some ways, has found his Department responsible for covering the Prime Minister's tracks for a third blunder that he made when he was Chancellor-the tearing up of the system of banking supervision that was in place in 1997 and its replacement with a new system, the tripartite arrangement, which failed its first test. Worse still, only a few weeks ago the Chancellor found himself having to try to justify the Prime Minister's imposition of another piece of rhetorical nonsense legislation, the so-called Fiscal Responsibility Act. In fact, it is worse than nonsense, as it would require the fiscal stabilisers to be set aside in the event of a double-dip recession.
	Tucked away in the fine print of the Red Book-I have been sitting here all afternoon, so I have had a chance to glance at it-is an attempt to reconstruct what looks like the code for fiscal stability, the same code that lies in a heap of rubble alongside the golden rule and the sustainable investment rule. Interestingly enough, it is relegated to a footnote on page 31, whereas in the old days there used to be a glossy publication accompanying the Red Book. That is a measure of the Government's loss of confidence in their own ability to make the case for stability.
	The second great task for any Budget to accomplish is to contribute to a programme for long-term prosperity-a growth agenda. I never believed that new Labour's economic strategy for growth was coherent, even when I used to hear it when Labour was in opposition. It has often seemed to consist of a long list of micro-measures, frequently altered and usually requiring higher spending and tax. Many have brought with them a higher regulatory burden, as the Institute of Directors has pointed out, and many have led to complex tax changes that are more distortive than they have been effective.
	The Chancellor added to that today when he announced £2.5 billion of so-called investment for industry. The extra money comes out of a slight improvement, which the Chancellor also announced today, in overall public finances since the pre-Budget report, but whatever the merits of the measures it seems highly irresponsible to use that small amount of extra room to start spending more. Surely the logical thing must have been-should have been-to use it to start reducing the deficit. Each individual spending measure could have some merit, but it looks as if this Budget, in any case, has just given us more of the same: meddling in the economy with taxpayers' money.
	The counterpart to the accumulation of all those tax rises in recent years, huge as they have been, is the increase in public spending, along with borrowing. The dramatic rises in spending have almost certainly reshaped the British economy-in my view, for the worse. Some measures may have been right, but cumulatively, when the dust has settled, it will be clear that they have reduced, not increased, the UK's long-run growth rate.
	Perniciously, much of that spending has been described as investment-an abuse of language. I very much hope that in the next few weeks, when we have, I hope, a new Government, we will get back to calling the salaries of teachers and doctors, for example, expenditure rather than investment. Honest language is a necessary counterpart to honest finance from the Treasury, as are honest statistics and forecasts, which I hope will come with the creation of an office for budget responsibility.
	I can well understand that setting out how to dismantle the Prime Minister's public expenditure empire has been too much for the Chancellor, and it has for another reason. Much of the spending has created its own interest groups. One has only to look, for example, at the growth of the quango state. Quangos are everywhere, and many have become state-funded lobby groups. They pervade British life and are powerful pressure groups, impeding any reductions in spending. They may be a way of buying votes and maintaining political support, but such spending does not amount to a strategy for public expenditure or growth in the long run.
	New Labour was a strategy for winning power...not for dealing with Britain's fundamental problems, such as our inability to pay our way in the world, the pools of poverty and deprivation, and the widening social gaps... these were Labour's lucky years, with steady growth, a balance of payments cushioned by oil, the City pouring out money, the majority kept happy by rising house prices and living standards improved by accumulating debt. This fool's paradise conned New Labour into thinking that its policies...were working, when in fact all was bubble-blowing.
	Those are not my words but those of the hon. Member for Great Grimsby (Mr. Mitchell), and you will find them, Mr. Deputy Speaker, on page 41 of  T he House  M agazine.
	Nor has Labour delivered a strategy for success in its own terms-helping the poor and vulnerable in society. That should always be, and has always been, a central task for any responsible Government, and to be frank the record is very mixed. The right hon. Member for Birkenhead (Mr. Field) said that there has been a
	steady increase in the numbers dependent on meanstested assistance... an increase in the number of families pushed onto meanstested assistance... and... more and more people are eligible for one form or another of meanstested relief.
	He said:
	The tax burden of families-
	has risen-
	faster than for other groups,
	and he concluded:
	These failures cannot be explained away entirely by the collapse of the...Labour Government's economic strategy.
	The interesting thing about those remarks is that the right hon. Gentleman did not write them a few weeks ago; he wrote those words in 1979 in a book entitled, What Went Wrong, after Labour's last disastrous spell in office.
	History, of course, does not exactly repeat itself. Not all the poverty figures have deteriorated exactly as they did last time, and nor, as a matter of fact, are the industrial action on our streets today and Labour's vulnerability to the power of the unions owing to the extent to which it is dependent on them for funding, as serious as that was a quarter of a century ago.
	The similarities, however, are at least as strong as the contrasts. A misunderstanding about what creates and sustains growth, and complacency about growth and how to maintain it, have always been hallmarks of Labour Governments, including this one. Today, the Chancellor announced his forecast for growth, above trend-3 to 3.5 per cent. for 2011. It might happen, but it is well above the average of independent forecasts. I hope that it happens, but I cannot help feeling uneasy about relying on it, as he has. I cannot help sensing that those optimistic numbers have more to do with showing a plausible forecast for the reduction in the deficit than with confidence in the economy's resilience.
	Seven years ago, in a major publication on economic policy published by the Treasury, the Prime Minister wrote:
	in 1997, as in 1944-
	he does not do things by half measures, does our Prime Minister-
	a new paradigm
	was required with
	far more effective mechanisms for crisis prevention
	and
	far greater attention to financial stability.
	The introduction of the same book reads:
	No doubt in the years to come, as the UK economy experiences various shocks, it will be possible to assess the strengths and weaknesses of the new system-
	the one that he had just announced and was putting in place.
	Those years have come and gone. The weaknesses of Labour economic strategy have been brutally exposed and much damage has been done. We now need another Government, and a fresh team, to repair the damage.

Rob Marris: It is a pleasure to follow the hon. Member for Chichester (Mr. Tyrie). I often disagree with most of what he says, as I do today, but he is always thoughtful and well worth listening to. That is in the nature of parliamentary debate.
	I want to start my remarks on the Budget, somewhat prosaically, on the question of excise duty on beer, which is no less than the Economic Secretary to the Treasury, my hon. Friend the Member for Dudley, South (Ian Pearson) would expect, because he, like me, is a west midlands man. The three main pub chains in the United Kingdom are based in the west midlands-Enterprise Inns, Punch Taverns and, of course, Marston's, as it now is, but Banks's, as my hon. Friend and I have known it for 40 or more years. I am proud to say that Banks's brewery, as it was-Marston's now-is headquartered in my constituency. Not only is it in charge of the third largest pub chain in the UK; it is a major brewery in its own right.
	I am dismayed that the Government, yet again, have put up excise duty on beer to the tune of 2p a pint-2 per cent. above inflation. We have a problem with alcohol in our society, but generally it does not emanate from pubs or people drinking Somerset cider, which was referred to earlier by the hon. Member for Somerton and Frome (Mr. Heath); it comes from cheap off-licence alcohol, and often from what one might refer to as chemical cider-if it has been near an apple, it is because it passed a vegetable or fruit wagon on the road going the other way.
	Of course, putting up duty on cider to a swingeing level might have an effect on chemical cider, and on drinking in a way that contributes too often to antisocial behaviour, but it will also hurt pubs. That is true not only of cider but particularly beer, which is a major drink in our society. Cider, of course, is a great drink, but less widely drunk in the UK. This is a case of the Government looking at a problem but coming up with the wrong solution. So I make my annual plea to the Government-it has not been successful so far, but it is worth continuing to make it-to rethink the increase in excise on beer and to focus their efforts on the minimum price proposals. Indeed, those are being discussed in Scotland, although I do not know if they have been enacted there. That would do more to tackle the antisocial behaviour about which many people are concerned.
	Turning from that somewhat local issue-the excellent Marston's is in my constituency-with national ramifications, I want to look at the bigger picture of the national debt. Public finances are under considerable pressure in the United Kingdom at the moment; that is no secret. We are all aware of that, and so are just about all our constituents. I was, however, somewhat heartened by the Chancellor's predictions today. Of course, they might prove over-optimistic, although that has not often been the case for Treasury forecasts in the past.
	Table 2.3 on page 25 of the Red Book repeats some of the statistics the Chancellor mentioned in his Budget speech. It states that the accumulated public sector net debt will rise from 43.8 per cent. of GDP in the financial year 2008-09 to 74.9 per cent. in 2014-15, which is as far as the table goes. That is a considerable rise. That would lead to the United Kingdom having an accumulated national debt lower than or broadly equivalent to that of major competitors such as France, Germany and the United States. Canada is the exception, in that its accumulated net debt is considerably lower, although it is increasing somewhat during the recession.

William Cash: Will the hon. Gentleman give way?

Rob Marris: I am afraid I do not have time.
	Table 2.3 also states that public sector net borrowing would peak at 11.8 per cent. in the year that we are just finishing, and fall to 4 per cent. by 2014-15. Four per cent. is still a big deficit to be running after five years, but it is not nearly as big as I feared it might be, because of the steps taken by this Government to secure the recovery. We need to strike a balance on the economic level-I will come to the human level in a minute-between making cuts, because we cannot carry on running such a deficit and because of the need to reassure the international capital markets, and cutting too soon, as the Conservatives are proposing, which would jeopardise the economic recovery. In those circumstances, growth-anaemic as it has been in the past quarter-might stall completely, placing even greater pressure on public finances.
	Disappointingly, the Leader of the Opposition hardly put forward a single proposal today that had any meat on its bones regarding what this country should do, given the state of our public finances. He intimated that, in his view, the Chancellor was not cutting enough and not cutting quickly enough-an honourable and coherent position, but one with which I profoundly disagree-but there was no meat on those bones. I understand that there is an Opposition policy on bank bonuses, which is now broadly shared by the Government. That is to be welcomed. There is also a proposal for a Tobin tax-sometimes called the Robin Hood tax. The Government's position is that such a tax should have multilateral agreement, which is sensible. The Conservative position is to introduce it unilaterally, which is surprising. The Lord Mayor of London has described that plan as bonkers. The Conservatives might know more than I do, but it does seem strange to go unilateral on that, however desirable the effect of the tax might be.
	The right hon. Member for Witney (Mr. Cameron) also mentioned a council tax freeze. Attractive as that might sound, such a proposal flies in the face of what is often said on both sides of the House about local control and decentralisation. It is all very well to go for local control, decentralisation and all those nice clichés about empowering the people, but when central Government want to freeze council tax or prevent the closure of a hospital-which is Conservative policy-we get back to centralisation. Getting that balance right is a constant problem for politicians on both sides of the House.
	Another subject that the Leader of the Opposition did not mention today-although it was brought up indirectly in the Budget in relation to the freeze on inheritance tax allowances for at least the next year-was the Conservative proposal for an inheritance tax windfall for 3,000 of the wealthiest families in the country. I do not think that that is a good way to proceed. It is intellectually coherent, but I just happen to disagree with it. It goes against my prejudices and I think that it is wrong.
	The Leader of the Opposition in attacking the Budget was right to say-quite accurately, as far as I am aware-that the UK entered this recession sooner than many other countries and will come out of it later than many other countries. What that critique singularly overlooks, however, is that the recession in the UK has been markedly shallower than that in many of our competitor countries, which has had a real effect on employment. Unemployment in Spain is at 19.3 per cent.; here, it is 8.2 per cent. That affects an awful lot of people's lives. It is not just a question of the length of the recession in this country; its shallowness, importantly, has had a positive effect on people's lives. Many people are in work who might well not have been if the Government had not taken the steps they did to lessen the effects of the recession.

Andrew Tyrie: The hon. Gentleman has the figures in front of him, but I have not. However, I think he will find that, peak to trough, the fall was faster and deeper here than in any other major industrialised country. If it was not actually the deepest, it was very near to it. The Minister disagrees, but he can read the figures in a few days' time and tell me exactly where we are in the pecking order. In any case, employment in the labour market has been more resilient, but that is due to reforms the Conservatives put through in the 1980s and '90s, which, luckily, Labour did not dismantle.

Rob Marris: My understanding is that the recession has been deeper in Germany and Japan, for example. In fact, Germany may now be going back into recession. Of course the recession has been big in this country; I believe our GDP shrunk by about 6.2 per cent. last year. It is big, but when it comes to unemployment, although the recession has had an awful effect in this country, it is not nearly as bad as it is in some of our competitor countries-I think I am right in saying in every other G7 country, including Canada, which on just about every other statistic has been much better placed than the UK.
	Let us look at the broad approach of what a Government should be doing. Again, the Leader of the Opposition is very honest. He says, If you want to see what we would do if the Conservative party were in government, look at what councils are doing. His approach to the economy and the Budget was openly enunciated in his speech to the Conservative party conference last autumn when he berated big government. There is a big ideological divide there: I think there is a lot to be said for a Government protecting people, which my Government-I am proud to say-have tried to do with some success during the recession.
	If we look at the economic policies of Wolverhampton city council, we see that the Opposition approach to the economy is to use the state of public finances as a cover for shrinking the state. That is what they wish to do. I do not wish, as a Labour MP, to shrink the state. There is a big ideological divide.  [Interruption.] The hon. Member for Stone (Mr. Cash) shouts out Shame from a sedentary position. He is open and honest as ever-we are both west midlands MPs-as he thinks, broadly, that less government, not necessarily minimal government, is a good way to go. I disagree.
	The ideological approach can be seen in Wolverhampton city council, controlled by a joint administration of Conservatives and Liberal Democrats, which is making cuts. My hon. Friend the Economic Secretary is a west midlands MP, too-our constituencies share a local newspaper-so he will know all about the big cuts going on. Five community centres have closed and the price of meals on wheels has almost doubled. Sheltered accommodation in my constituency has been closed to save money. A care home was closed in the Wolverhampton, North-East constituency to save money and a 106-year-old woman was evicted in the snow. The Minister might have seen the picture in the newspaper, while other Members might be aware of it because it was on national television. It would be understandable if it were part of a necessary cuts programme, but it is not; it is totally ideologically driven. I do not have a problem with that as long as people are honest about it.
	Why do I say this is ideologically driven? The Conservative-Liberal Democrat administration has controlled Wolverhampton city council for nearly two years, so what have we seen over that time in respect of moneys from central Government, which make up three quarters of funding for any council in England? There has been an above-inflation increase from central Government in their subvention to Wolverhampton city council, yet it still goes on saying-frankly, I think it is a lie-We have to cut £40 million from the council budget. Well, it does not; it chooses to make that cut-which is fine, but let us have an open, honest debate about it.

Lynne Jones: I have a leaflet here from the Conservative candidate for Birmingham, Hall Green. On one side it says Only the Conservatives are promising cuts before the election, which is risky but honest. On the other side, however, it condemns cuts in the constituency budget. Although the budget is controlled by the Liberal Democrats, it comes from a council that is run by the Conservatives and the Liberal Democrats.

Rob Marris: Sadly, 'twas ever thus, was it not, with certain Janus-faced politicians in certain local authorities in the west midlands, and, I believe, elsewhere?
	Let me end by thanking the Government for acceding to a campaign that I, and others, have been running for some time on the question of capital allowances, which are vital to areas such as the west midlands that depend heavily on manufacturing. Let us be clear about the facts. Although there has been a huge decline in the number of people in the United Kingdom who are employed in manufacturing-it is awful for those who lose their jobs, across the west midlands and elsewhere, when factories close-there has been no decline in manufacturing output.
	This is partly to do with what my hon. Friend the Member for Brent, North (Barry Gardiner) said about productivity. Productivity in UK manufacturing across the piece, not necessarily in every sector or every workshop but in terms of the broad figures, has increased a great deal. There are very similar levels of manufacturing output-in fact, they have slightly increased under the present Government-along with markedly lower levels of employment. That is what we get if we increase output per person hour.
	Manufacturing remains vital to the UK economy and its future, both in the context of the way in which the economy runs and as a motor to help us emerge from the recession. It still accounts for roughly 50 per cent. by value of our exports, and I am pleased to say that we are still the sixth biggest manufacturer in the world. I read nonsense in newspapers like  The Daily Telegraph about the death of manufacturing and the fact that we do not make things here any more. It is complete balderdash. I want more manufacturing-especially in the west midlands, obviously-and I want more manufacturing employment in an expanding sector that is helping to take us out of the recession.
	Leaving aside what the Government have done for research and development and so on in the Budget and the pre-Budget report, I can tell the House that in the Budget capital allowances have been increased markedly, which will have a particularly beneficial effect on smaller businesses. We need those capital allowances to encourage the investment that will enable us to drive forward for the future, and the Government were absolutely right to increase them.
	I must, with some sadness, contrast that with the position of the Conservative party. Some of its members may not know this, but the Conservative party has a clearly enunciated policy of cutting capital allowances. It seems absolutely potty to me to take billions of pounds away from manufacturing by cutting capital allowances just when there is a consensus in our economy and our society that we need to nurture manufacturing, and that we must enable it to expand so that it can help to pull us out of the recession.
	I am proud that the Government are increasing capital allowances to help manufacturing. I contrast them with a Conservative party which seems to have learned very little, if anything, about manufacturing, and wants to cut capital allowances. How sad can you get?
	 Ordered, That the debate be now adjourned.-( Kerry McCarthy.)
	 Debate to be resumed tomorrow.

PETITIONS

Soundproof Fencing (A50 Staffordshire)

William Cash: It is my honour to present the following petition, which I strongly support.
	The petition states:
	The Petition of residents in Staffordshire regarding the failure of the Highways Agency to have provided the promised and effective soundproof fencing along the A50 running next to their properties,
	Declares that the petitioners recognise the Highways Agency promised effective soundproof fencing along the A50, that the Agency's plans for fencing was either not erected or where it was erected made little or no difference, that this has left a constant noise so that it is no longer possible to sit out in their gardens, or sleep in bedrooms closest to the A50, and which has left many with a poor quality of life.
	The Petitioners therefore request that the House of Commons urges the Secretary of State for Transport to do all in his power to ensure that the Highways Agency deliver the promised soundproof fencing which runs along the Blythe Bridge area of the A50.
	And the Petitioners remain, etc.
	[P000775]

Newborough Pharmacy (Peterborough)

Stewart Jackson: I rise to present the following petition.
	The petition states:
	The Humble Petition of Sharmeen Datoo of 1317 Lincoln Road, Peterborough, PE4 6LW,
	Sheweth, that Newborough Pharmacy in Newborough, Peterborough be supported and kept open. This pharmacy provides a valuable and much needed service. It will be a great loss to the community if the pharmacy is to close on account of lack of your support.
	Wherefore your Petitioners pray that your Honourable House asks the Secretary of State for Health that he does all in his power to ensure that the Pharmacy in Newborough, Peterborough remains open. Furthermore that he asks the Peterborough Primary Care Trust to review its decision to grant dispensing permissions to another Practice in the City to dispense in Newborough.
	And your Petitioners, as in duty bound, will ever pray, c.
	[P000776]

Kurds (Human Rights)

Andrew Pelling: I have 10 petitions to present tonight, out of 27 petitions that have come to the House, and which have been signed by many thousands of Croydon residents. As a courtesy, I shall only read the prayers relating to the petitions.
	This petition states:
	The Petition of the people of Croydon and its environs,
	Declares that ethnic Kurds in Kurdistan do not receive the human rights that they are entitled to expect.
	The Petitioners therefore request that the House of Commons urges the Government to take steps to liaise with its international partners in the European Union and farther a field to lobby for improved human rights for Kurds in Turkey, Syria, Iraq and Iran.
	And the Petitioners remain, etc.
	[P000777]

Freedom Pass (Croydon)

Andrew Pelling: The petition states:
	The Petition of the people of Croydon,
	Declares that the Freedom Pass is essential to the quality of life of many Croydon residents, and that the change in funding of the Freedom Pass may compromise the scheme.
	The Petitioners therefore request that the House of Commons urges the Government to take such steps as are necessary to ensure the scheme continues.
	And the Petitioners remain, etc.
	[P000778]

Shirley Hills Viewpoint (Croydon)

Andrew Pelling: The petition states:
	The Petition of the people of Croydon,
	Declares that the Shirley Hills viewpoint is in sad disrepair.
	The Petitioners therefore request that the House of Commons urges the Government to encourage the London Borough of Croydon local council to return the Shirley Hills viewpoint to its former glory.
	And the Petitioners remain, etc.
	[P000779]

East Croydon Station

Andrew Pelling: The petition states:
	The Petition of the people of Croydon,
	Declares that the slopes at East Croydon station can be an especial challenge for the frail and unwell.
	The Petitioners therefore request that the House of Commons urges the Government to encourage Network Rail to work to improve accessibility at East Croydon station.
	And the Petitioners remain, etc.
	[P000780]

Rail Capacity (Croydon)

Andrew Pelling: The petition states:
	The Petition of the people of Croydon,
	Declares that the service provided between Croydon and London stations is insufficient to meet demand, with unacceptable levels of overcrowding for hard working commuters and late night travellers.
	The Petitioners therefore request that the House of Commons urges the Government to increase rail capacity to Croydon.
	And the Petitioners remain, etc.
	[P000781]

EU Referendum

Andrew Pelling: The petition states:
	The Petition of the people of Croydon,
	Declares that there should be a referendum on European Union membership.
	The Petitioners therefore request that the House of Commons urges the Government to call a referendum on EU membership at the same time as the next General Election.
	And the Petitioners remain, etc.
	[P000782]

Human Trafficking

Andrew Pelling: The petition states:
	The Petition of the people of Croydon,
	Declares that human trafficking continues to blight our town.
	The Petitioners therefore request that the House of Commons urges the Government to use its influence to maintain a dedicated anti-trafficking unit in the Metropolitan Police.
	And the Petitioners remain, etc.
	[P000783]

Traffic Accidents (Addiscombe, Croydon)

Andrew Pelling: The petition states:
	The Petition of the people of Addiscombe,
	Declares that they are concerned about road traffic accidents in the Lower Addiscombe Road on and near the zebra crossing at the old Addiscombe railway site.
	The Petitioners therefore request that the House of Commons urges the Government to encourage the authorities to introduce a pedestrian activated traffic light controlled crossing to replace the zebra crossing on the Lower Addiscombe Road at the old Addiscombe railway site.
	And the Petitioners remain, etc.
	[P000784]

Traffic Accidents (Coombe Lane, Croydon)

Andrew Pelling: The petition states:
	The Petition of the people of Croydon,
	Declares that they are concerned about serious road traffic accidents on Coombe Lane, Croydon.
	The Petitioners therefore request that the House of Commons urges the Government to encourage the authorities to introduce improved road safety measures on Coombe Lane, Croydon.
	And the Petitioners remain, etc.
	[P000785]

Anti-Social Behaviour (Croydon)

Andrew Pelling: I am most grateful for your tolerance of such a large number of petitions, Mr. Deputy Speaker. The final petition states:
	The Petition of the people of New Addington and Fieldway wards,
	Declares that they are concerned that numerous cars have been broken into and damaged, while bins have been repeatedly set on fire around Oak Bank.
	The Petitioners therefore request that the House of Commons urges the Government to encourage the authorities to introduce improved lighting and an increased police presence in Oak Bank.
	And the Petitioners remain, etc.
	[P000786]

BRITISH HIGH COMMISSION IN SOUTH AFRICA

Motion made, and Question proposed, That this House do now adjourn. -(Kerry McCarthy.)

Ann Widdecombe: I am very grateful indeed to have the opportunity this evening to raise the case of my constituent Mr. David Acott, his wife Belinda Acott, and their children Keegan and Kaylee. I am sad to have to say that they have received very short shrift, both from the high commission in Pretoria and from Lunar house.
	I am delighted to see the Minister for Borders and Immigration-a Home Office Minister-in his place. I am sure that shortly he will tell me that he will ensure that my comments are duly relayed to his colleagues in the Foreign Office, but I want considerably more than just for those comments to be relayed. I would like a definitive response from the Foreign Office on how aware it is of day-to-day operations in Pretoria at the high commission and on what measures it will put in place to improve the levels of courtesy and helpfulness-and, for that matter, the levels of sheer, plain accessibility to British citizens.
	David Acott, who now resides in my constituency, is a British citizen-he has a United Kingdom passport-but his wife, Belinda Acott, and their children are not. They travel on South African passports. Mr. and Mrs. Acott have been married for 11 years, and their children are aged nine and four. Throughout their marriage, both the husband and wife have been employed full time, and they are by no means lazy or without resourcefulness. They had lived their whole lives in Zimbabwe, until 2001, when they were given 24 hours to leave their farm, as the war veterans were taking it over. I wonder how the Minister or I would feel if we were given 24 hours to leave our homes, without the slightest notion of what we were going to do next.
	What should have happened at that point is this. Because Mr. Acott is a British citizen, the family should have come back here, and his wife and children should have claimed asylum, which most Zimbabweans who were turned out of their farms have been successful in obtaining. However, they did not do that. They are self-sufficient individuals. They were afraid for the safety of their elder child, who at that stage was not even two. So, they left Zimbabwe and crossed the border into South Africa with just three suitcases. At that stage, they thought that South Africa was a viable option because they have relatives there and because it is much closer to Zimbabwe than the UK.
	They could not take any money out of Zimbabwe, because the Reserve Bank of Zimbabwe could not exchange it into the South African rand as no foreign currency was available. They left with three suitcases and no money, so it is not very surprising that they should choose the neighbouring South Africa rather than the rather more far-flung UK. They moved in with the brother and sister-in-law of Mrs. Acott and that family supported them until they were able to become South African citizens. Mrs. Acott's mother and father were born in South Africa so, with little ado and very swiftly, they were able to become South African citizens. They started again from scratch in South Africa, opened their own company, which lasted until September 2009- eight years after they were turned out of Zimbabwe-when the recession hit South Africa and they had to close their business as it was running at a massive loss.
	They immediately started looking for employment but fell foul of new rules that had been brought in in South Africa, of which the Minister is almost certainly aware. They were sent away from all the interviews and all the job positions for which they applied because they were not black African people, as the law in South Africa stated that under black empowerment to redress the inequalities of apartheid priority had to be given to previously disadvantaged groups. Naturally enough, with no money, no job and no business, they asked what they should do and they were advised to return to England. It was at that point that everything started to go wrong.
	Mr. Acott was a British citizen-naturally, he had a British passport. Three of his sisters are already residing in the UK. Mrs. Acott's great-grandfather was British and they decided therefore that the obvious and best option would be to start a new life in the UK. So, they did what I would have expected any British citizen-which Mr. Acott is-in that position to do. They went to the British high commission. They asked what was required of them and how they could start the process of immigrating to the UK. Not only was there unhelpfulness and a failure to get any information at all, but, worse than that, they could not even get past the security guard-I hope that the Minister is listening at this point, and I stress that they could not even get past the security guard-for an interview or a meeting with a consultant.
	I might be terribly naive, but I always assumed that when a Brit cit was in trouble abroad, they could go to their country's embassy or high commission and that they would at least receive advice and certainly would not be turned away by a security guard. They did not give up-they tried several times, but to no avail. Eventually, they were told that they should go and see a UK visa agent. When they asked the agent what he required, he said that he would require at least 50,000 South African rand, from people who had already been refugees once and now, for the second time, found themselves without any resources. That was what was required just to start the procedure and then, when he had that 50,000 rand, he would try to help them. They did not have that amount of money-they had already been unemployed for four months-and decided to come to the UK, with the three non-Brit cits coming in on visitors' visas, and to try to start the procedure here.
	I think it is an appalling business that a British citizen in distress, who obviously had taken every possible step to help himself, should be turned away by a security guard from the high commission in Pretoria.
	However, the scene shifts: they leave South Africa and manage to come over here. When they came here, they believed that they would face a fairly simple procedure to get accepted. They arrived here on 19 January 2010, and stayed with one of Mr. Acott's sisters. They have made no claim whatever on the state.
	The day after they arrived, the husband immediately obtained a national insurance number. The family registered with a GP, opened a bank account, and took steps to change a Zimbabwean driver's licence to a British one. Mr. Acott also received from the Home Office Identity and Passport Service the forms to apply for his identity card.
	Within a matter of weeks, Mr. Acott was working for Everest Ltd. as a sales consultant. He obtained a distinction in his certificate of achievement at the sales academy on 18 February, following a week's training course. He had interviews with British Gas, and waited for the required training programme.
	In other words, these people have been self-motivated self-starters throughout. They joined the local libraries, and enrolled their children in local schools. Then, Mrs. Acott went to the Home Office in Croydon to ask for the required forms to produce necessary documentation. She was told by the officer at the inquiries counter that he could not help, and that she should have applied for her spouse visa in South Africa. She said that she had tried to apply in South Africa, to which the official at Lunar house replied, Well, you should have forced your way.
	Now I say to the Minister that, if that is how his officials respond to people in distress-as these constituents of mine are-they need further training. Indeed, I hope that that official will be tracked down and disciplined.
	Mrs. Acott then asked what she and her husband could do. The official told them rudely to get back on an aeroplane and fly to South Africa. She says that they told him that they had sold their motor vehicles, furniture and worldly belongings and still only just managed to purchase their air tickets, with a bit of cash left over to move to the UK. The family had nothing left, nor anybody in South Africa to return to, but the official said, That's the only thing you can do. We cannot help you. She asked, Who can we see and who can we talk to? He said, Please leave. There's nothing we can do, or anyone for you to see.
	In tears, they have now tried several UK visa agents and been told the same thing. Interestingly, however, when they contacted the Visa Bureau, they were given advice that they had not been given by any official. Mrs. Acott was told, If your husband David is the biological father of your children-which he is-and you were married at the time your children were born-which they were-you should already be British citizens. That meant that they should be able to make an application here in the UK for British passports.
	Mrs. Acott was also told, If David is the biological father of your children, and you were not married at the time of their birth, your children would still be able to make applications to register as British citizens here in the UK and thereafter apply for British passports. I do not know whether that information is correct, and nor does Mrs. Acott. However, if it is correct and stands as good advice, why did she have to get it from an outside organisation and not from either Lunar house or Pretoria?
	We have a situation in which two young children-one is nine, the other four-and their mother are being told that they must go back to South Africa to apply for a spouse visa to enter this country when their visitors' visas expire. As a matter of detail, the visas expire during the school term time and when the World cup is on. I imagine that travelling to South Africa at such a time would be a trifle expensive, and certainly very disruptive to the older child's education.
	But that is a matter of detail. Those three people are being told that they have to go back to South Africa-where they have already tried to obtain the necessary documents. What guarantee is there that they will not be turned away by another security guard if they go back to South Africa, or that they will be able to make the applications that they wanted in the first place to make?
	This is a very sorry tale. It is a sorry tale of how the British look after their citizens abroad and of how our officials respond to people in distress in this country. It is a grossly sorry tale if there is one iota of truth in the advice that was given to Mr. and Mrs. Acott, because that advice was not given by any official British body. If they are to go back to South Africa, what reassurance can the Minister give me that they will be dealt with properly and officially? If they are not to go back, will he advise them on what they are to do, because their visitors' visas will expire in June?
	They have a subsisting marriage-it has lasted 11 years-and they have done their level best at every twist and turn of their fate to look after themselves, sometimes with the help of family. They are not lazy, they do not want to be charity cases, and they are not scroungers, yet they are utterly abandoned.

Phil Woolas: May I first offer the traditional congratulations to the right hon. Member for Maidstone and The Weald (Miss Widdecombe) on securing this adjournment debate? May I also use this occasion to record my admiration for her? I do not know whether this is her last such debate-that probably has more to do with you, Mr. Deputy Speaker, and Mr. Speaker, than with me-but she presents her case with characteristic forthrightness, giving the Minister at the Dispatch Box the usual bout of nerves and fear.

Ann Widdecombe: I doubt that.

Phil Woolas: The right hon. Lady should not underestimate herself.
	I do not want to go into the specifics of the case in too much detail, and I hope the right hon. Lady also appreciates that that would be difficult for me to do. I have read the correspondence that she kindly sent to me, including the letter from the family to her constituency office and her subsequent representations. Some of the points in that letter do not square with the Home Office's understanding of what could have happened and what did happen-and, of course, the events took place within the general context of the rules. However, I will come back to her with the detail after this debate, so that she can pass that on to her constituent. That is the duty of the Minister, and I hope she accepts that I take my duties in this Chamber very seriously indeed, even if I sometimes disagree with her on policy points, although not as many as I sometimes think I should.
	The British high commission in South Africa is one of our most important postings. Following the changes that have taken place and the improvement of the managed migration policy, the visa operation now falls under the UK Border Agency, not the Foreign Office. There are arguments for and against that-I obviously think that it is beneficial-but people following the debate might have wondered why a Home Office Minister is responding to a debate on a high commission function. The reason is that the Government thought that in that way the right hon. Lady was more likely to get the answers she was seeking, because the case involves visas, not the general operation.
	Suffice it to say that relationships with South Africa are very important to us. The high commission in Pretoria has 216 staff to provide political, consular and visa services. The visa section employs 82 of those staff-some UK people, and some locally employed. There is also a consulate general in Cape Town. We did the global visa waiver test in 2008, and in March 2009 we introduced the visa requirement for travel from South Africa. The problem that we previously faced was the Zimbabwean problem that the right hon. Lady has highlighted. There was significant evidence of abuse, with Zimbabweans presenting South African documents in the UK. That was a major challenge and required the implementation of a visa regime in relation to South Africa. That was not peculiar to South Africa, as we did the same thing with a number of countries.
	For the past few years, all visa applicants have been required to enrol their biometrics, and the way in which that is done may be at the root of this issue. We have agents-organisations and companies to which we franchise-to take the initial visa applications, but that is not done initially at the high commission. So although anyone who has a British passport has an absolute entitlement to service at the high commission, the initial stages of visa applications are done through agents. We have invested £4 million in extending the facilities in Pretoria to provide that service. The commercial partner that provides that front-of-house service-I hate that phrase, but I think the right hon. Lady knows what I mean-in South Africa is a company called VFS Global.
	We have implemented what we call a hub-and-spoke arrangement, whereby visa applications can be made in one city or posting and then decided and processed in the continental hub. Pretoria is the African hub, so its operation is particularly important to us. I shall not list the benefits of that arrangement now, because I suspect that the right hon. Lady would fall asleep. She can read them elsewhere, and I am quite prepared to discuss those issues if necessary.
	Let me give the House an idea of scale. In 2009 the British high commission in Pretoria processed 122,609 visa applications, of which 101,200 were from South African nationals. Since the introduction of the new visa requirement for South African visitors, the British high commission has offered exceptional levels of customer service. In 2009 more than 95 per cent. of all visit visa applications were resolved within five days, two thirds of all settlement applications were resolved within 10 days, and 97 per cent. of all South African visa applications were issued. Of the 101,200 visa applications from South African nationals, 88,098 were in the visitor category. In the settlement category, 86 per cent. of the applications from South African nationals were issued. In other words, there is an exceptionally high volume of applications and, I would argue, a very good service within the commitments that we make.
	The entry clearance officer or the in-country official will consider the application carefully to ensure that the correct decision is made. However, the onus rests on the applicant to demonstrate that they meet the requirements of the immigration rules.

Ann Widdecombe: I am sure that this lady would have been hugely grateful to have got anywhere near an entry clearance officer. The family was habitually turned away, and only on the production of 50,000 rand would they have made any progress at all.

Phil Woolas: As the right hon. Lady has intervened, let me turn to the specifics of the case. We do not recognise the 50,000 rand figure. We assume that it has come from an agent independent of either the high commission or the agent that we employ. There is no correlation between that figure and the visa fee, given the number of people in the family involved. I must also make the point that a visitor visa was issued, and the application process for such a visa involves producing evidence of return arrangements, so I assume that they were in place, although I will have to get back to the right hon. Lady about that. That must have been done through the agent, with the application processed through the hub arrangement in the high commission, so the situation is puzzling. While I do not recognise the 50,000 rand figure for a visa fee, which I understand translates to about £4,500, the visitor visa will have been issued on the assumption that the relevant family members would return to South Africa, but given the evidence that she has provided, I assume that that was not the intention, which raises difficulties for my officers in this case.
	Although I have no doubt whatsoever about the family's intention or integrity, the rules-and indeed the law-state that one cannot apply in country. Indeed, I cannot envisage any Government allowing such an in-country application for settlement or citizenship, and the advice that the right hon. Lady reports that the family was given is consistent with that position.

Ann Widdecombe: I absolutely agree that there is a clear rule that if someone wants to enter the country on the basis of marriage, they must apply from outwith the country. The Minister will know that I have upheld that rule consistently, and that I have advised constituents to go back. However, the point that I keep making is that the family tried that, and Mrs. Acott simply says, What happens if I go back? I will be exactly where I was when I was trying to leave.

Phil Woolas: I understand the point that the right hon. Lady makes, which was also made in the letter to her office and the written representations that I received. That is the point about which we are puzzled, because a visitor visa was processed, and it is odd that the option of applying for a spousal visa was not available, yet an application for a visitor visa was processed. I think that we will have to come back to that point.
	I know that the right hon. Lady appreciates that I have to uphold the rules. I have no intention of hindering the family-I understand that the father is a British citizen-and obviously they have made a choice about their future lives, but I have to apply the rules.
	On the subject of courtesy, the right hon. Lady referred to several stages involving the high commission, and perhaps the visa application office and a private agent, and she also mentioned Lunar house. Information with which I will provide her after the debate will feed into our understanding of the situation. Although I am not saying that I do not believe the account that has been given, some of it is puzzling. Individual circumstances vary, however, and misunderstandings occasionally arise while processing visa applications. The basic rules on applications are, as she acknowledges, that an application for a spousal visa must be made outside the country and that an in-country transfer is not usually allowed, although there are exceptional circumstances in which that may happen. A visitor visa was issued in this family's case and, as I said, it is logical that that must have involved an appointment, an application and the processing of documents. I am therefore puzzled as to why the application for spousal and family visas was not made at that stage.
	The assumption throughout this debate is that the lady in question-the wife-is the primary applicant. There are children involved as well, who would be entitled to apply for British citizenship by virtue of their father's British citizenship.  [ Interruption. ] The right hon. Lady says from a sedentary position, From here? The issue that we would have been dealing with is the wife's application. The right hon. Lady raised the issue of the children this evening. Of course I will come back to her. Some aspects are puzzling, and I hope the illumination that I will be able to shed on the case will satisfy her.
	The right hon. Lady refers to the good intent of the family. My experience is that all applicants claim, or have, good intent. Unfortunately, the rules are the rules, and I must apply them. She does not need me to tell her that; I think she did this job at one stage in her rather formidable career, as I knew already-but learned even more about from my research. If I may, I shall write to her with the details that I can give her, to reassure her and her constituents that I take this matter seriously.
	 House adjourned without Question put (Standing Order No. 9(7)).